The emergence of a new asset is a once-in-a-generation golden opportunity for investors. After the first meltdown, crypto is hot again, and TradFi has big plans for it.
The predicted yet unexpectedly swift approval of Ethereum ETFs by the SEC marks a new wave of institutional adoption of digital assets. It amplified the effect on the market from the BTC rally and the debut of its ETF,
launched by TradFi heavyweights like Grayscale and Blackrock.
Renewed optimism is fostering increased cross-flows between
institutions and the digital asset sector. BNY Mellon is expanding its digital
assets team. State Street plans to introduce crypto custody services. Franklin
Templeton is considering launching a new crypto fund targeting tokens beyond
Bitcoin and Ethereum.
Franklin Templeton Weighs New Crypto Fund Investing in Tokens Beyond Bitcoin, Ether: Report https://t.co/I8xVuqEplm via @coindesk
— Siciliano38 (@Sicilliano38) June 22, 2024
Paradoxically, a shift in mainstream acceptance of crypto as a legitimate asset class, propelled by institutions that were to be replaced by innovations, stemmed from the crypto community. If “don’t fix what isn’t broken” were a case for crypto, the
flood of VC would continue its flow, but it has altered significantly.
Annual VCs inflow fell from $14.6 billion in 2021 to $9.6
billion in 2022. In 2023, it plummeted to $1.62 billion, an 83% crash YoY. So what are the new directions?
In Q1 2024, crypto showed signs of recovery. Total VC funding surged by 40% to Q4 2023, reaching $2.4 billion. For the first time since 2022, it exceeded $1 billion for two straight months. In contrast, crypto CeFi funding does not fall into the same basket. In total, startups attracted $232m, a 58% yoy drop from Q1 2023 ($553
million) and 59% less than in Q4 2023 ($572.21m).
Historically, VC flagship projects were indicators of market
trends. Funding patterns indicate that crypto CeFi is undergoing a refocus. In
Q1 2024, investors funded 13 types of projects, a sharp decline from 31 in 2023
and 54 in 2022.
In 2022 and 2023, CeFi funding diversified across multiple
areas, covering widely recognized categories like social trading and extending
into analytics
