A report released by crypto intelligence company Messari on Thursday, October 5, 2023 shows a continued downward trend in crypto industry funding.
This is as the industry faces regulatory uncertainty in the United States (US) and the opening of the criminal trial of FTX founder and former CEO Sam Bankman-Fried, as quoted from the Investopedia page, written Monday (9/10/2023).
Even though the price of bitcoin rose more than 60 percent in 2023, crypto industry fundraising fell 36 percent from the second quarter to the third quarter of 2023, a clear indication that the crypto bear market is not over yet.
This is a continuation of the downward trend that began after the peak of raising more than USD 15 billion in the first quarter of 2022.
The total fundraising collected in the last quarter, around USD 2.1 billion, was the smallest amount since the fourth quarter of 2020, according to the Messari report. Additionally, the 297 funding deals made in the crypto industry in the quarter were the fewest since the fourth quarter of 2020.
Blockchain infrastructure was the sector that received the largest amount of funding overall at 18 percent of the total amount raised, while the decentralized finance or DeFi sector saw the most activity with 67 deals closed.
More specifically, the proposed scale solution received 43 percent of the funds raised. Activity in these two sectors has been a trend over the past year, in addition to money flowing into the gaming and services sectors.
Binance Labs was the most active crypto industry investor in the third quarter of 2023 with 23 deals made. His primary focus for crypto industry investments is DeFi, zero-knowledge and privacy-focused gaming and projects.
Binance Labs accounted for more than double the number of transactions completed by subsequent investors. However, the top 10 investors in the last quarter only accounted for 7 percent of all crypto industry funding deals, indicating there is great diversity in terms of funding sources.
The reasons for the crypto market continuing to decline include regulatory uncertainty in the US and a general decline in interest in the industry following the collapse of the FTX crypto exchange and other platforms.
A number of exchanges and large crypto projects, namely Binance and Coinbase, have been the target of lawsuits by the US Securities and Exchange Commission this year. Now, the criminal trial of FTX founder Sam Bankman-Fried on fraud and conspiracy charges has begun. At the same time, Congress is considering legislation with new regulations for the crypto industry.
