Crypto startups pulled in major $
On Monday, bitcoin’s volatility reached its lowest point since January. [Namthip Muanthingthae via Getty Images]
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Crypto startups raised $200 million last week. Also: Crypto VC funds set 2023 records.
Bitcoin’s volatility hit its lowest point since January. Plus, the latest crypto market moves.
This week in numbers. The percentage of bitcoin’s circulating supply in the hands of long term holders, and other key stats to know.
VC DOES IT
Crypto startups raised more than $200 million last week
While BTC is up more than 80% this year, crypto startups have had a rockier ride, with second-quarter venture funding for web3 companies down 76% compared to the same period last year. This week, however, a slew of positive crypto-biz investment news emerged — with projects ranging from a privacy-focused protocol to a metaverse startup attracting new capital, and crypto VC firms reporting their two biggest fundraises of the year.
Here’s what you need to know.
What kinds of crypto startups received new investments?
Crypto infrastructure projects — which include companies developing new protocols and other underpinning technology — have been getting the most attention from investors in recent months, raising nearly $500 million in June, and more than $115 million last week alone.
Leading the way among infrastructure startups last week was RISC Zero, which raised $40 million to continue building its “zero knowledge virtual machine” protocol. “Zero knowledge” protocols are becoming increasingly popular in crypto, as they allow an individual to prove digital ownership (over, say, an asset or a user account) without disclosing extraneous personal data.
Last week's largest funding round was a $54 million Series A investment in Futureverse, a metaverse startup that’s creating a “collection of interoperable applications built on top of user data” — including games, messaging protocols, payments infrastructure, and more.
How much funding did crypto VC firms raise recently?
Venture capital firms raised a combined $37 billion from investors in 2021 and 2022 to pour into crypto startups. This year, the investment spigot has been comparatively dry, with crypto VC firms raising just $1.8 billion in web3 funding in the first half of 2023. Now, as crypto markets have ticked upward over the last month, the pendulum may be swinging back, as two major VC funds notched two of the year’s biggest funding rounds.
In its fourth round of funding, crypto VC giant Polychain Capital (which has led investments in companies including Uniswap) added $200 million to the $2.6 billion it already has under management, with plans to raise another $200 million during this cycle. According to Fortune, “Polychain will be looking in particular at Ethereum-based projects similar to its investments in Arbitrum and Scroll, both layer-2 networks on Ethereum, and EigenLayer, an Ethereum re-staking protocol.”
Also in its fourth funding round, CoinFund — which has backed more than 100 companies since 2015, including NBA Top Shot creator Dapper Labs — surpassed its fundraising goals, bringing in $158 million. Per Bloomberg, “With the new cash infusion, CoinFund will focus in part on startups at the intersection of crypto and AI. ‘Some of the more consumer stuff is a little bit in a lull, like if you look at the NFT space,’ [the firm’s CEO] said.”
The bottom line…
Over the course of the “crypto winter” era that began last year, venture capital activity has trended steadily downward (although the huge fundraises around the peak era have allowed many startups to continue building). While it’s too soon to say if the trend has reversed, this week’s news is another positive narrative shift for crypto. Or as Fortune put it, “The raise is a bullish sign for the industry, suggesting ongoing interest in the sector.”
MARKET UPDATE
Crypto volatility remained low, some altcoins bounced on Twitter news
Crypto is known for volatility — a measure of how much prices swing up and down over time — in part because it’s a relatively young market based on new technology. But this summer at least, crypto has been notably stable: BTC has been hovering within a few percent of $30,000 for more than a month now, boosted by a flurry of news about Wall Street crypto initiatives. BTC’s volatility index hit its lowest point since January on Monday as prices dipped slightly to start the week, settling above $29,000.
Trade activity and volatility may have slowed as market watchers wait for this week’s Fed meeting. The central bank is widely expected to raise interest rates by one quarter of a percent as part of its efforts to cool inflation. As a very general rule, markets for “risk assets” like crypto and tech stocks tend to be sensitive to interest-rate news (but when a move is widely anticipated it may also be “priced in” ahead of time).
Meanwhile, some altcoins saw prices rise for reasons unrelated to the Fed. In the wake of Elon Musk’s rebrand of Twitter to X, an assortment of minor X-themed tokens saw spikes. Also, as often happens when Musk and Twitter make news, DOGE jumped this week — rising as much as 10% with some speculating that it could be used for payments on the X platform. (Tesla allows customers to pay for some merchandise in DOGE, and Musk once tweeted that DOGE might be an option for Twitter Blue subscription payments.)
For the first time in a month, money began flowing out of crypto investment products last week according to a CoinShares report. Around $13 million flowed out of BTC products, which had been boosted in previous weeks by news of Wall Street giants like BlackRock pursuing a “spot BTC ETF.” On the plus side, funds built around ETH and XRP saw new investment — with inflows for ETH funds totaling $6.6 million. Speaking to Coindesk, CoinShares’ head of research said, “[ETH] sentiment, which has been poor this year, is beginning to turn around.”
NUMBERS TO KNOW
$184 million
The value of digital assets that Tesla currently holds on its balance sheet, per the company’s Q2 financial statement, released last week. This represents the third consecutive quarter that the electric car giant has held its crypto at this level after reducing its holdings from $218 million after Q3 2022. Tesla originally bought $1.5 billion of BTC in February 2021 before selling roughly 75% the following year.
$50 million
The amount set aside by the Avalanche Foundation to purchase tokenized assets minted on its blockchain. Tokenization, which involves using smart contracts to digitize the rights to real-world assets such as real estate, can offer a number of advantages, increased transparency, lower transaction costs, and the ability to fractionalize ownership.
$150,000
Annual salary for the new role of executive director of Wyoming’s Stable Token Commission. The commission was formed in March with the purpose of issuing “stable tokens,” which are invested “exclusively in United States treasury bills,” and would be redeemable for one dollar. The director’s duties include implementing a plan for the stable token, conducting regulatory analysis, ensuring compliance, overseeing marketing, and more.
75%
The percentage of available bitcoin that is held by long-term BTC holders — a new all-time high according to analytics firm Glassnode. Long-term holders are addresses that have held bitcoin for at least 155 days. Per Glassnode, “This suggests HODLing is the preferred market dynamic amongst mature investors.”
TOKEN TRIVIA
When was Litecoin founded?
A
2009
B
2011
C
2014
D
2017
Find the answer below.
Trivia Answer
B
2011
