Crypto funding falls to a three-year low in Q3

71
1
Crypto funding falls to a three-year low in Q3

In Q3 the cryptocurrency industry experienced another tough go, with funding in the space falling to a three-year low, blockchain intelligence firm Messari said in a report this week.

The amount raised by crypto-focused firms in Q3 fell to just under $2.1B over 297 deals, down 36% in both sectors from Q2 and the lowest since Q4 2020.

In Q1 2022, funding reached a peak of almost $17.5B across more than 900 deals, but an industry-wide decline emerged shortly after, following the collapse of the Terra ecosystem.

In terms of the overall funding amounts and deal counts, last year's returns fell sharply in the Q2-Q3 period, when the demonetization of stablecoin TerraUSD and sister token Luna destroyed tens of billions of dollars in market capitalization within a week and led to the collapse of several other key players like Sam Bankman-Fried's multibillion-dollar empire.

While the year's gains were handsome, prices of major digital tokens posted losses for Q3 2023, as investors came to the understanding that interest rates may remain elevated for longer with inflation still too high for the Federal Reserve's liking. The two largest cryptos, Bitcoin and ethereum, retreated by market value 8.6 and10.6 during the quarter. The S&P 500 lost 3.8%, down from a year earlier.

Messari said that the majority of deals in Q3 were concentrated in early-stage rounds, with seed funding accounting for the largest stage total with $488M raised over 98 rounds.