Galaxy Research Predicts a Rough Year for Crypto Venture Investments

According to Galaxy Research, 2900 agreements were made totaling more than $30 billion in investments in cryptocurrency businesses in 2022.

Alex Thorn, the head of firmwide research at Galaxy, called it a “monster year” that was just barely surpassed by the $31 billion in VC investments in 2021. However, he warns that this year, the money may not flow as freely. 

As per the January 5 study by Thorn, the macroeconomic and cryptocurrency sector situations in Q3 and Q4 resulted in substantial investment pullbacks. Although the fourth quarter witnessed the least number of deals as well as the least money invested in two years. 

The cryptocurrency specialist said that if the current numbers hold, crypto and Web3 companies may find it difficult to raise money in 2023.

The Galaxy executive said: 

“The macro, monetary, and crypto asset environment portends a difficult year ahead for all involved.”

He continued by saying that the environment for entrepreneur financing will also become more challenging due to lowering firm values and tougher investor criteria. Thorn believes: 

“Startups will need to be laser-focused on fundamentals, taming operational expenses and driving revenue in 2023.”

Galaxy Confirms US has Highest Number of Crypto Startups 

He projected that because America still leads the crypto-startup ecosystem, the regulatory framework in the United States will also have an impact. 

According to the research, startups with U.S. headquarters were involved in more than 40% of all cryptocurrency venture capital agreements made last year. 

Crunchbase also hinted at a slower 2023 for venture capital across all sectors in a study published on January 5. Global venture capital declined 35% from 2021 to 2022, although the cryptocurrency market remained strong, providing some promises for the current year.

However, the founder of Ethereum (ETH), the second-largest cryptocurrency by market cap, and Russian-Canadian entrepreneur Vitalik Buterin has offered his predictions for this year’s market trends. He believes that this year would be favorable for the cryptosphere.