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Last year was a big one for crypto venture capital despite multiple high-profile meltdowns and the FUD (fear, uncertainty, and doubt) tsunami that followed. However, the funds may not flow as easily this year, a crypto researcher warns.

The number of deals and amount invested by venture firms into Web3 and crypto startups was a little over $30 billion in 2022, according to Galaxy Research

Galaxy’s head of firmwide research, Alex Thorn, described it as a “monster year” that was only just eclipsed by the $31 billion in VC investments in 2021.

However, in a Jan. 5 report, Thorn stated that macroeconomic and crypto market conditions led to significant investment drawdowns in Q3 and Q4. This will likely continue into 2023, until macro and crypto market conditions improve.

Thorn noted that there were 2,900 venture deals in 2022, though the fourth quarter saw the fewest deals and the lowest capital invested in two years.

If this trend continues, crypto and Web3 firms may struggle to raise funds in 2023, Thorn suggested.

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

He added that declining company valuations and stricter demands from investors will bring about a more difficult fundraising environment for entrepreneurs.

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

The United States regulatory environment will also have implications since America still dominates the crypto-startup ecosystem.

More than 40% of all crypto venture capital deals last year involved a U.S.-headquartered startup, according to the report.

“The continued importance of the U.S. to these markets, and its leading position, provide ample reason for U.S. policymakers to clarify and codify rules and regulations for the emerging space.”

Related: Investors chase Web3 as blockchain industry builds despite bear market

Investor dispositions and crypto markets are cyclical, however.

Gene Frantz, a general partner at Google and Alphabet’s independent growth fund CapitalG, told Forbes last month that the 2023 year-end outlook and headlines will look a lot better than today’s.

“The current news cycle may be rough, but persistence and innovation combined with an improving economic outlook will restore the optimism that has always defined our [venture capital] industry.”

In a Jan. 5 report, Crunchbase also alluded to a slower 2023 for venture funding across all sectors. In 2022, global venture funding fell 35% from 2021, but the crypto sector remained buoyant for the year, offering a glimmer of hope for the year to come.