Venture capital funding in the cryptocurrency sector, though rising in 2024, remains sluggish compared to previous years, posing a potential hurdle to a sustained market recovery, according to analysts at JPMorgan.
JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a report that indicators for cryptocurrency venture capital flows “look rather subdued” year-to-date relative to previous years, and added they’ve argued that a recovery in these is a “necessary condition for a sustained recovery in crypto markets.”
The rebounding cryptocurrency market has, however, seemingly spurred renewed activity among venture capital. This month alone saw 1kx raise $75 million to back early-stage crypto startups, while Paradigm reportedly seeks to raise between $750 million and $850 million for a new fund.
Additionally, Galaxy Digital, Hack VC, and Hivemind Capital are reportedly raising $100 million each for their respective funds, with Alliance, a crypto accelerator, securing $10 million each from Brevan Howard Digital and Galaxy Digital for its third fund, and aiming to raise an additional $80 million by July.
Despite the slow activity of VC funding, JPMorgan analysts noted that crypto hedge funds have been more active this year, with their assets under management rising sharply over the past six months to an estimated $20 billion.
The report also reiterated the analysts’ stance that the likelihood of a spot Ethereum exchange-traded fund (ETF) being approved in May remains below 50%, although they believe the U.S. Securities and Exchange Commission will eventually greenlight these funds.
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- Source: https://www.cryptocompare.com/email-updates/daily/2024/apr/12/
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