2024 Crypto Venture Capital Landscape Review: Infrastructure Project Financing Active, Fundraising Weak

The cryptocurrency market experienced significant growth in 2024, mainly due to the launch of spot Bitcoin ETFs and a supportive political environment for encryption in the United States. The market capitalization of liquid cryptocurrencies soared to $3.4 trillion, an 88% increase year-on-year, with Bitcoin's market cap nearing $2 trillion. Bitcoin's increase accounted for 62% of the total market increase, and the surge in memecoins and AI tokens also played a driving role.

However, the encryption venture capital sector still faces challenges. Major market trends such as Bitcoin, memecoins, and AI tokens offer limited investment opportunities. Fields like DeFi, gaming, metaverse, and NFTs have not attracted a large amount of new investment. Mature infrastructure companies face competitive pressure from traditional financial institutions. Emerging trends like stablecoins, tokenization, DeFi-TradFi integration, and the intersection of encryption and AI show promise, but are still in the early stages.

According to the data, in the fourth quarter of 2024, venture capitalists invested $3.5 billion in encryption startups, a quarter-on-quarter increase of 46%, but the number of transactions decreased by 13% to 416. The total investment for the year was $11.5 billion, with a total of 2,153 transactions. It is expected that by 2025, the annual investment amount is likely to exceed $18 billion.

The correlation between Bitcoin prices and investments in encryption startups has significantly weakened since 2023. Possible reasons include decreased interest from institutional investors, a shift in market narratives, and a broader downturn in the venture capital market.

In various segments, infrastructure dominated the 2024 encryption venture capital, attracting over 610 deals and reaching $5.5 billion. NFT and gaming startups raised $2.5 billion, while the number of financing deals in the DeFi sector increased by 85% year-on-year. Web3 financing showed resilience, raising $3.3 billion.

The most active investment institutions include Animoca Brands, a venture capital department of a certain trading platform, Cogigent Ventures, and others. Among angel investors, notable figures include Polygon founder Sandeep Nailwal, Paul Taylor, and DCF God.

In 2024, venture capital fundraising overall was weak, with 79 new funds raising $5.1 billion, the lowest annual total since 2020. Medium-sized funds between 1 billion and 5 billion became the mainstream trend. Notably, Fund III managed by Paradigm became the largest closed-end fund in 2024.

In terms of investment projects, Monad, Farcaster, Berachain, and others have performed exceptionally in their respective fields. AI integration, DeFi on Bitcoin, and dedicated blockchains have become key trends for 2024 and beyond.

Overall, the landscape of encryption venture capital in 2024 shows a cautiously optimistic trend. Despite a decline in the short term, the continued focus on early-stage projects and the emergence of new trends indicate that the industry has potential growth momentum.