The number of crypto venture capital deals also experienced a deceleration in 2023, with a total of 1,819 deals, marking a 32% decrease from the 2,671 deals recorded in 2022.

Cryptocurrency and blockchain startups received a funding injection of $10.7 billion from venture capitalists in 2023,  a significant 68% decrease compared to the $33.3 billion invested in 2022.

According to Block Research, the majority of these investments occurred during the initial six months of 2023 before a decline in the latter half. However, November 2023 witnessed a notable increase in funding.

Noteworthy is the shift in the distribution of deals as there was a rise in the proportion allocated to pre-seed, seed, and Series A startups in 2023, whereas mid and later-stage deals saw a decline in comparison to 2022.

NFT/gaming, infrastructure, and Web3 retained their leading positions in terms of deal count, while other categories like data, trading, and enterprise experienced a decrease in the number of deals. This provides a concise summary of the cryptocurrency funding landscape in 2023.

In terms of total investment, 2023 secured the third-highest position, albeit significantly below the record-breaking levels witnessed in 2022, which stands as the most substantial year for cryptocurrency venture capital funding to date.

“The significant drop in crypto funding in 2023 was largely expected given the macroeconomic environment, regulatory uncertainty, and the scars left by recent major crypto failures,” Abhishek Saxena, principal lead at Polygon Ventures.

“However, most investors and founders were still surprised by the sheer intensity of the funding pullback. This funding winter served as a healthy and necessary correction, enabling the industry to take stock and refocus on critical priorities,” Saxena added.

Despite the deceleration in 2023, the total investment for the year still surpasses the levels observed in previous bear markets. In the 2019-2020 period, only $6.4 billion was invested, signifying a notably lower amount compared to the funding received in 2023.

The number of crypto venture capital deals also experienced a deceleration in 2023, with a total of 1,819 deals, marking a 32% decrease from the 2,671 deals recorded in 2022. Despite this decline, the overall number of deals throughout 2023 remained consistently higher than the monthly averages in 2020 and closely aligned with the deal count in 2021.

Cryptocurrency venture capitalists anticipate an upswing in both funding and deal activity for the year 2024. This anticipation aligns with recent price fluctuations and the projected bullish trends anticipated in the cryptocurrency markets.