Investment into digital asset firms has been in freefall this year as a deep ‘crypto winter’ sends shockwaves through the sector and causes venture capital firms to turn off the funding taps.
Crypto and so-called ‘Web 3.0’ firms have attracted just $2.2bn worth of investment in the fourth quarter of the year so far, down from $4.6bn in the previous quarter and a far-cry from the $11.5bn in the first three months of the year, according to the crypto report from investment data firm Pitchbook.
The slowdown comes as the sector is rocked by a plunge in crypto prices and a string of high-profile bankruptcies including Sam Bankman-Fried’s exchange FTX.
Analysts at Pitchbook said that while 2021 had been a breakout year for funding the sector, 2022 had seen investment go into reverse.
“While the amount of capital invested trended upwards each quarter in 2021, in 2022, it has been the exact opposite,” the analysts said.
“Only $4bn was invested in [the third quarter] of 2022, representing a 38.3 per cent quarter on quarter decline and the lowest amount since [the second quarter] of 2021,” the report found.”
Just 141 deals were struck during the third quarter of the year – the lowest levels since the final quarter of 2020.