
A report released by Messari today showed a continuing downtrend in crypto industry funding in the face of regulatory uncertainty in the U.S. and the opening of the criminal trial of FTX founder and former CEO Sam Bankman-Fried.
Although Bitcoin's price has surged more than 60% since the year, the 36% drop in cryptocurrency sector funding from the second quarter to the third in 2023 is a clear indication that the crypto bear market hasn't ended. It's a repeat of a downward trend that started in the first quarter of 2022 after a peak of more than $15 billion in fundraising.
The deal raised $2.1 billion is the least since the fourth quarter of 2020, the Messari report said. The 297 fundraising deals in the crypto industry were also the lowest since the fourth quarter of 2020.
The blockchain infrastructure sector received the most funding at 18% of the total amount raised, while the decentralized finance, or DeFi, sector posted the most activity with 67 deals closed.
The recommendations for scaling solutions received 43% of the money raised by blockchain infrastructure projects. The DeFi sector's largest deal total and most money raised were tied down by exchanges. The activity in these two sectors has been a regular activity for the past year, in addition to money flowing to the gaming and services industries.
Binance Labs was the most active crypto investor in the third quarter of 2023, with 23 deals made. DeFi, gaming, and projects focusing on zero-knowledge and privacy-focused technologies have been the main focus of its investment in the crypto industry.
Binance Labs closed more than double the number of deals closed by the second-closest investor. The top 10 investors in the latest quarter accounted for just 7% of all crypto industry fundraising deals, which indicates a wide range of sources of funding.
The absence of regulation uncertainty in the U.S. has resulted in a general decline in interest in the industry after the collapse of crypto exchange FTX and other platforms.
The U.S. SEC has faced lawsuits for several major crypto exchanges and projects, including Binance and Coinbase. The FTX founder, Sam Bankman-Fried, faces charges of fraud and conspiracy. Congress is preparing for legislation with new regulations for the crypto industry, at the same time.