Report: Cryptocurrency venture capital reaches $11.5 billion in 2024, still below previous bull market levels

According to CoinDesk, Galaxy Digital stated in a research report on Wednesday that despite the recent rise in digital asset prices, cryptocurrency venture capital (VC) activity remains below previous bull market levels. In 2024, the total capital allocation of venture capital funds to the cryptocurrency industry is $11.5 billion, lower than in 2023. Galaxy pointed out that in the first few bull markets of 2017 and 2021, VC activity was highly correlated with cryptocurrency prices, but in the past two years, despite the rise of cryptocurrencies, VC activity has remained sluggish. There are multiple reasons for the stagnation of the venture capital market. Galaxy stated that these reasons include the 'barbell market', where Bitcoin and its new spot ETFs dominate the center stage, while Meme's' marginal net new activity 'is limited. These meme coins are difficult to obtain funding support and have a questionable lifespan. The report states that new projects at the intersection of artificial intelligence (AI) and cryptocurrency are receiving increasing attention, and upcoming regulatory changes may bring more opportunities for stablecoins, decentralized finance (DeFi), and tokenization. The report suggests that some large investors may gain cryptocurrency exposure through spot Bitcoin ETFs, "rather than turning to early-stage VC investments Galaxy stated that the United States completed the most transactions and invested the most funds in the fourth quarter. Galaxy added that early transactions accounted for 60% of the total investment in the fourth quarter, with stablecoin companies raising the most funds. The report also points out that in 2024, venture capitalists invested a total of $11.5 billion in startups focused on cryptocurrency and blockchain. These funds invested $3.5 billion in 416 transactions in the fourth quarter, a 46% increase compared to the previous quarter.