This column was co-written by Frank Chaparro, director of special projects at The Block, and Laura Vidiella of MNNC Group. The views expressed in this column are their own and do not reflect the opinions of their employers.
The liquid crypto market has been on fire, with memecoins soaring and Bitcoin on a steady upward climb. Flows into crypto exchange-traded funds have been particularly strong, fueling optimism among retail investors and driving asset prices higher. However, this success on the public side contrasts sharply with the struggles faced by crypto venture capital funds.
According to Galaxy data, the fundraising environment for crypto VC managers is the toughest it has been in three years. Last quarter, only eight new funds were raised, pulling in just $140 million—the lowest total since the third quarter of 2020.
This stark contrast between the booming liquid markets and the faltering private sector highlights an interesting dynamic in today’s crypto market. While retail investors are finding it relatively easy to secure gains in the public markets, fund managers are facing increasing difficulty raising and deploying capital for private investments.
It's not all bleak, though. Bitcoin ETF flows are continuing to gain momentum, adding context to market trends. As noted by David Lawant, spot ETF net flows (excluding GBTC) are on the verge of crossing $40 billion, with $11.8 billion entering the market even during flat price periods since April.
While ETF flows may not provide a crystal ball for Bitcoin's future price movements, they do offer valuable insights into the market's underlying strength. Keep an eye on these trends as they could play a pivotal role in shaping the next phase of crypto’s evolution.
The Block’s Frank Chaparro serves up the latest headlines, charts, trends, and views on crypto and DeFi from around The Block, Twitter, and The Scoop pod. Subscribe to The Scoop newsletter, which hits inboxes on Tuesday and Friday mornings.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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