The year 2022 will go down in history as a challenging year for CRYPTOCURRENCIESas the bleak market circumstances were reflected in a decline in the amount of venture capital (VC) funding pouring into the blockchain and cryptocurrency industries.

An analysis by Blockdata reveals that there would be steady declines in funding on a quarterly basis through 2022. This comes after a period of growing VC investment in the larger Web3 field through 2021.

Blockdata closed out the Q4 2022 analysis of the value of VC funding by noting a 34% decline from the prior quarter total. Data was obtained from CB Insights. Compared to the first and second quarters of the year, the third quarter results were much worse, falling 67% and 53%, respectively.

After hitting a record $11 billion in investments and 692 deals in the first four months of 2022, the ensuing decline in VC investment came on a quarterly basis after that point.

Blockdata identifies a number of reasons for the decline in VC funding for cryptocurrency and blockchain-related projects in 2017. The collapse of the Terra ecosystem, which cost $60 billion and occurred in May 2022, is noted as an event trigger that led to the eventual insolvency of bitcoin lending companies Three Arrows Capital and Celsius.

The FTX implosion in November 2022 further contributed to the volatility that swept across the space, while global macro conditions in the capital markets, which were affected by rising interest rates and inflation, they also played a role in declining investments made by venture capitalists. .

As a direct consequence of this, VCs only contributed $3.7 billion in funding during the fourth quarter of 2022. This is a 61% decrease compared to the $9.6 billion that was contributed during the same quarter. period in 2021. Total capital received by blockchain and cryptocurrency companies fell 11% annually, from $32 billion to $29 billion, bringing the total to $29 billion.

A good takeaway that Blockdata points out is the fact that the number of transactions in 2022 is expected to increase by 35% compared to 2021. According to the company, there has been a slowdown in venture capital spending, but investors are still they are eager to finance blockchain. based on technology, applications and business. This is despite the fact that venture capital spending has declined.

According to the research findings, venture capital investments are gradually moving towards “non-volatile ideas.” These innovations include cross-chain bridging, payments and remittances, lending, decentralized autonomous organizations, asset management, and digital identity management.

The fourth quarter saw a number of major venture capital investments. Amber Group managed to get the most money, raising $300 million during a Series C round in December 2022. This was done to combat reductions in certain assets that were affected by the FTX scandal.

During the fourth quarter, there were a total of nine “blockchain mega-rounds,” each of which resulted in the receipt of more than $100 million in investment. Only Uniswap and Celestia, with respective market values ​​of $1.7 billion and $1 billion, were able to achieve the coveted “unicorn” designation during the fourth quarter of the prior year.

Due to its participation in thirteen separate rounds of fundraising for blockchain and cryptocurrency businesses, Coinbase Ventures has been recognized as one of the most active corporate venture capital investors through 2022.