Crypto VC Trades Continue to Fall as Activity Tracks Bear Market Prices

Venture capital deal flow to cryptocurrency startups is going in the same direction as cryptocurrency market cap: down.

Total crypto market capitalization fell nearly 59% from around $2.250 billion at the start of the year to $923 billion at press time, according to data from CoinMarketCap.

“Deal activity tracks crypto market capitalization very closely,” Robert Le, fintech analyst at PitchBook, told TechCrunch. "It's a little behind the times, but if you overlay the crypto market capitalization on the amount of venture capital entering the space per quarter or per month, it tracks closely."

Over the past two quarters, global crypto venture deal activity has grown from an all-time high of $10.87 billion in Q1 to $7.63 billion in Q2 and 2019. $4.44 billion in the third quarter, according to PitchBook data as of Oct. 3. . The last time the total deal amount was this low was in the first quarter of 2021, when the total was $3.46 billion.

"The number of transactions has dropped a lot," Le said. "What you're seeing is crypto companies that are getting investment are getting a bigger share compared to last year."

Basically, investors are putting more money into smaller bets and companies or projects they feel "higher conviction" about, Le said.