All areas of the crypto sector have not been equally affected by crypto winter. Senior analyst Robert Le at PitchBook claims VCs still place bets on Web3.
According to Le, venture capital financing has been moving away from centralised crypto services like lenders and exchanges and toward startups associated with building Web 3.
“There has been a shift away from centralized crypto services,” @PitchBook‘s Robert Le points out, citing an 85% decline in investment in Q3 from its recent report.
Investors are deploying funds into Web3.
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— CoinDesk (@CoinDesk) December 16, 2022
“Web 3,” which includes the metaverse, gaming, and other blockchain-based innovations, is one sector where investors have invested much more money over the previous six months. Venture capitalists would invest $1.5 billion into Web3-based businesses in the third quarter of 2022.
In comparison to the anticipated $3.4 billion in revenue for Web3-based content platforms by the end of 2022, PitchBook predicts that by 2027, these platforms will generate an estimated $39 billion.
Venture capital investment in exchanges, custodial wallets, crypto on-ramps, and many centralised lending and borrowing services had dropped by around 85%. Given the high-profile failures of numerous organisations, notably Celsius Network and BlockFi, the collapse is not shocking but severe.
Even before the FTX crash, VC funding was on the wane. The Bahamas-based controlled exchange filed for bankruptcy last month after a CoinDesk article showed that FTX’s native coin, FTT, supported Alameda Research.
Le predicted that non-crypto investors would get out in the wake of the current crypto winter, leading to a continued fall in investments through 2023.
While VC funding is expected to fall further into 2023, he anticipates an uptick in venture investments in the second half of next year. The company predicted that crypto platforms would provide more information by then, and regulatory clarity may become more apparent, giving investors more confidence.