Venture dollars and the number of investments into crypto startups closed out 2024 essentially flat compared to the prior year, according to new PitchBook data.
While the price of bitcoin smashed through $100,000 in the fourth quarter—an all-time high— it appears VCs didn’t get the memo. We’ve yet to see the usual flurry of checks that has historically accompanied a booming bitcoin price, though there is often a bit of a lag in venture investments reflecting this.
Instead, investors concentrated their bets into fewer deals, pushing up median valuations. Pre-money valuations rose across the board, according to PitchBook’s Q4 2024 Crypto VC Trends report, and the median valuation across all crypto VC investment stages hit $32.1 million last year, up 78% from $18 million in 2023.
“Three years ago, anyone could raise capital with a white paper and very little traction,” says Robert Le, a PitchBook senior analyst who covers emerging technology. “Now, you’re seeing that’s not the case. Any founder going out to raise capital from the market right now has to really show a significant amount or traction or something else other than a technical white paper.”
Analysts expect the trend of concentrated deals to continue.
“What does overall investment activity and volume look like in this sector? It tends to be very cyclical,” says Electric Capital managing partner Avichal Garg. “When prices go up, people want to make more investments. In no small part, that’s because you have a bunch of generalist VCs or later-stage VCs…if you look at it from a smart money perspective, what you tend to see is that the smart money tends to invest heavily in the down cycle and then taper going into the upcycle.”
Analysts expect upcoming exits to spur more venture activity in the sector. Circle, a stablecoin issuer, will “be the bellwether of all of the crypto companies that are more traditional, the non-token type,” says Le. “Everyone will watch to see what Circle does.”
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