Without a doubt, the popular revival of cryptos has sparked new business trends ranging from decentralised finance (DeFi) to non-fungible tokens (NFTs).
These brisk sub-industries within the larger crypto scene have culminated in hundreds, if not thousands, of new startups, with venture capitalists pumping money into them like never before.
— unfolded. (@cryptounfolded) April 2, 2021
According to a CB Insights survey, venture capital firms spent $2.6 billion in 129 crypto-based startups in the first quarter of 2021. This is greater than the cumulative sum spent in 2020, which totalled $2.3 billion across 341 transactions. The rise was largely motivated by Bitcoin scaling new highs, drawing more corporate and institutional buyers.
As institutional investors aimed to capitalise on the rising need for Bitcoin investment strategies, crypto financial services company NYDIG raised $100 million from Morgan Stanley and the Soros Fund.
With the digital art market rising to the spotlight, NBA Top Shot creator Dapper Labs and NFT marketplace OpenSea were able to raise $305 million and $35 million in funding, respectively.
Will the Crypto Industry’s Recent Boon Continue?
After its speculative mania in February, the NFT room has been cooling. According to NonFungible, the average daily volume of NFTs traded across marketplaces fell by 85 percent between March 25th and April 1st. In the case of Dapper Lab’s NBA Top Shot, the overall volume of NFTs in circulation fell by half as secondary market demand weakened.
These alarming signals will frighten some venture capital funds, possibly slowing investment in the cryptocurrency room.
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