After a historic year 2021, the 2022 financial year presented itself under the best auspices for the ecosystem of cryptocurrencies. But a cascade of scandals, a crypto crash and a bear market persistent have rattled the sector, which has seen investors turn away over the quarters. Ultimately, although start-ups in the sector have captured more than $30 billion in investments from venture capital funds in 2022, a level similar to 2021 ($31 billion), the coming year to end was characterized by a descent into hell once the first quarter was over.
In the first three months of the year, when all the lights were still green, money was flowing, as evidenced by the approximately $13 billion raised in around 1,100 transactions. One of the most substantial was to be credited to Yuga Labs, at the origin of the NFT Bored Ape Yacht Club collection (10,000 unique drawings with the effigy of humanized signs), with a fundraising of 450 million of dollars. But after this promising start, the climate quickly deteriorated.
Investments in crypto startups topped $30 billion in 2022. © Galaxy
A year ended with the weakest quarter in two years
Thus, the second quarter was marked, in May, by the crash of the stablecoin Terra, which caused the bankruptcy of the Three Arrow Capital fund and platforms such as Celsius Network and BlockFi. This earthquake caused investors to lose $40 billion, and saw more than $500 billion evaporate in just one week from the cryptocurrency market.
In the turmoil, start-ups in the ecosystem raised less than $10 billion between April and June. Over the second half of the year, this collapse worsened, with investments reaching $2.7 billion in the fourth quarter, with only 366 transactions recorded; that’s down more than 50% from the third quarter, when $6 billion was raised in 676 deals.
After a record first quarter, with almost $13 billion raised, only $2.7 billion was injected into crypto start-ups in the fourth quarter of 2022. © Galaxy
The last quarter of 2022 even recorded the lowest number of transactions and capital invested in the last two years. In this context, the year 2023 promises to be particularly difficult for crypto start-ups, engaged in a desperate quest for funding to ensure their development.