2024 Overview of the Cryptocurrency Venture Capital Market: Active Financing for Infrastructure Projects, Weak Fundraising

The cryptocurrency market experienced significant growth in 2024, largely due to the launch of spot Bitcoin ETFs and a crypto-friendly political environment. The market capitalization of liquid cryptocurrencies reached $3.4 trillion by the end of the year, an increase of 88% year-on-year. Bitcoin's market capitalization approached $2 trillion, contributing 62% to the overall increase. The Memecoin and AI token craze also played a driving role, particularly active on the Solana chain.

Despite the market recovery, the encryption venture capital sector still faces challenges. Mainstream trends such as Bitcoin, memecoins, and AI tokens offer limited venture opportunities. Fields that were once popular, like DeFi, gaming, the metaverse, and NFTs, have seen a decline in attractiveness. Infrastructure companies face competitive pressure from traditional financial institutions. Emerging trends such as stablecoins, tokenization, the fusion of DeFi and TradFi, and the intersection of encryption and AI hold promise but are still in the early stages. Macroeconomic factors also limit high-risk investment allocations.

According to data statistics, in the fourth quarter of 2024, encryption and blockchain startups received venture capital of $3.5 billion, a quarter-on-quarter increase of 46%. The total investment for the year was $11.5 billion, with a total of 2,153 transactions. Analysts predict that the annual investment in the encryption market will exceed $18 billion in 2025.

The strong correlation between Bitcoin prices and encryption startup investments has weakened since 2023. Possible reasons include cautious institutional investors, changes in market narratives, and a generally sluggish venture capital market.

In various sub-sectors, infrastructure dominated the 2024 encryption venture capital, attracting $5.5 billion in investments, a year-on-year increase of 57%. Key focuses included L2 scaling solutions, modular technology, and liquid staking. NFT and gaming financing reached $2.5 billion, slightly higher than the previous year. Web3 financing amounted to $3.3 billion, with DePIN emerging as a rapidly growing vertical. The recovery of DeFi is significant, with the number of financing rounds increasing by 85% year-on-year, and Bitcoin DeFi becoming a key driving force.

From the perspective of the financing stage, early-stage transactions account for 60%, while later-stage financing accounts for 40%, showing a significant increase compared to the previous quarter.

Among active investors, Animoca Brands, OKX Ventures, and Cogigent Ventures are at the forefront. Among angel investors, Polygon founder Sandeep Nailwal is the most active.

Overall venture capital fundraising in 2024 has dropped to its lowest level in six years, and encryption venture capital funds are also under pressure. A total of 79 new funds raised $5.1 billion, marking a new low since 2020. The trend for medium-sized funds ranging from 1 billion to 5 billion is evident. Notable large funds include Paradigm's Fund III, among others.

Annual investment projects worth paying attention to include Monad, Farcaster, Berachain, Story Protocol, 0G Labs, and so on. These projects cover multiple fields such as blockchain infrastructure, social networking, DeFi, IP management, and AI integration.

Looking ahead, AI integration, Bitcoin DeFi, and dedicated blockchains will become dominant trends. Overall, the cryptocurrency venture capital landscape in 2024 shows a cautiously optimistic outlook, with the industry maturing and laying the groundwork for future growth.