According to a survey, the crypto market will likely remain depressed through 2023. Significant investment pullbacks were already experienced in the second and third quarters of the previous year as a result of these market conditions.
There were sizable venture capital investments in the cryptocurrency industry in the beginning of 2022 despite numerous high-profile meltdowns, but it shrivelled in the second half. The head of firmwide research, Alex Thorn, predicts that money may not flow as readily this year.
In 2022, venture capital companies made a little more than $30 billion in deals and investments in Web3 and cryptocurrency start-ups. The fourth quarter of 2022 had the fewest venture transactions and the lowest amount of money invested in the previous two years, despite there being 2,900 venture deals overall.
If this pattern persists in 2023, companies in the crypto and Web3 sectors would have trouble raising capital.
What effects will American regulatory policies have on the cryptocurrency market? Fundraising will become more challenging for entrepreneurs due to declining firm values and tougher investor requirements. Startups will need to be intensely focused on the fundamentals, reducing operating costs, and generating revenue in 2023.
The regulatory environment in the United States, which continues to dominate the crypto-startup ecosystem, will also have an impact. A US-based startup received more than 40% of all crypto venture capital deals last year. The United States’ continued importance and dominance in the cryptocurrency industry provide ample reason for American policymakers to clarify and codify rules and regulations for the emerging space.
Venture funding across all sectors will be slower in 2023. Since 2021, global venture capital funding has decreased by 35% to $445 billion.
