Although the growth is slow in 2022, the encryption venture capital industry sees hope in 2023

Dec 12,2022
Although the growth is slow in 2022, the encryption venture capital industry sees hope in 2023

Although the market is sluggish, it is expected that the total capital of encryption business in 2022 will exceed the investment in 2021. The study was proposed by Pitchbook, a data company. These figures may indicate a good start in 2023. According to the research cited by Reuters, in the first nine months of 2022, global venture capital (VC) has invested nearly 20 billion dollars in cryptocurrency business. This is a 41% increase over the same period last year. A total of $21.2 billion was invested last year.

High continuous growth but low top cryptocurrency transactions

According to Pitchbook data, VCs invested $1.5 billion in web3 startups in the third quarter of 2022, up 44.5% month on month. If this momentum continues year on year, investor interest may trigger a rebound in the industry.

However, according to CoinGecko, Bitcoin has fallen by nearly 67% in the past year. BTC's current transaction price is between US $16800 and US $17200. Compared with the historical high of US $69000 last year, it dropped sharply. Ethereum is the second largest cryptocurrency with a market value of nearly US $1250. It also fell sharply from last year's peak of $4800.

The recent collapse of FTX, which was listed as bankrupt in 2022, further worsened the market sentiment. A few months ago, companies such as Celsius Network and Voyager Digital filed for bankruptcy protection.

However, according to Pitchbook's third quarter emerging technology indicators (ETI), large investment transactions are returning to normal levels. According to the report, "We recorded 10 ETI transactions with a scale of 100 million dollars or more, which is still higher than the historical quarterly average of five transactions since 2015, but lower than the 22 peaks in the fourth quarter of 2021 and the first quarter of 2022."

Web3 and Decentralized Finance (DeFi) may be the top investment in the industry in 2023.

Positive drivers of investor interest in 2023

Robert Le, encryption analyst at PitchBook, added: "The lack of clear regulation and guidance remains one of the biggest concerns and constraints in the encryption industry. Until better barriers are established in the form of established laws and guidelines, mainstream adoption is unlikely to occur."

With the EU finalizing the Crypto Asset Market (MiCA) Act, regulatory changes are under way. The UK Treasury is trying to make new rules. At the same time, the United States Congress is formulating a number of encryption bills. Therefore, the next year may be a year of radical change - especially when the collapse of FTX calls on Congress to act quickly to pass the CFTC law.

Therefore, although high-value encryption transactions have declined in the past two quarters, with the support of the new rules in 2023, the annual momentum may recover. However, many analysts are not optimistic about the price trend in the first quarter of the new regulations.

In addition, the 2023 Virtual Asset Market Outlook Report from Korbit, a cryptocurrency exchange, predicted that, with the monetary policy limiting the inflation trend, the market value would return to the previous level of more than $1.5 trillion in the next year. Due to the reduced demand for risk assets, the current market value is only about 800 billion US dollars. However, the platform expects the trend to reverse in 2023.


The above content describes that the total capital of encryption business in 2022 is expected to exceed the investment in 2021. If this momentum continues year on year, investors may be interested in the industry in 2023. With the support of regulatory and low inflation drivers, the interest of crypto VC can be restored in 2023.