There’s something phoenix-like about the crypto world. No matter how high the highs, or how low the ensuing lows, blockchain enthusiasts, founders and investors remain confident that their favored sector will rise again. You have to give it to them: It always has bounded back.
We saw this happen in the wake of the initial coin offering (ICO) boom, for example, when NFTs and DeFi took off, helping propel the web3 startup and token world to new heights.
Today, we’re checking on the vital signs of web3 as the sector struggles up the crater left by major tokens, blockchains and startup projects falling back to Earth after 2021. If there’s another rollercoaster ride coming in crypto land, we want to be ready for it.
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Sadly, there isn’t going to be a resurgence anytime soon. From an initial read of data from the past month, we can infer that the current crypto winter is far from thawing — it could even be getting colder. Let’s dig in.
Boom to bust?
Data from Crunchbase paints a jarring picture of investment in web3, crypto and blockchain startups.
Companies in the sector collectively attracted $1.2 billion in VC funding in April and May of this year, according to the firm’s web3 tracker. There’s still one month left in this quarter, but it’s pointless to expect any miracles: At the current rate, Q2’s tally would reach $1.8 billion, less than the $2 billion raised by web3 startups in Q1 2023.
That $2 billion wasn’t anything to write home about either. Though Q1 2023 was slightly better for web3 companies than 2020’s quarterly numbers, it was about five times less than Q1 2022 ($10.8 billion).