2021 has been a huge year for cryptocurrency. The total market cap has reached $3 trillion and venture capital funds have poured around $30 billion into the digital asset, which is more than in all previous years combined. With all this in mind, it is worth remembering that crypto is little more than a decade old.
This year’s $30 billion investment is almost 4 times the previous high of $8 billion, which occurred in 2018.
“We’ve moved beyond just digital gold. We’ve got financial services, art, gaming as a subcategory of NFTs, Web 3.0, decentralised social media, play-to-earn — all of that made investors think, `We don’t have enough exposure,’” said Spencer Bogart, general partner at San Francisco-based Blockchain Capital LLC, one the largest investors in the industry after financing more than 120 companies since its inception in 2013.
As other crypto firms including Coinbase Ventures, Digital Currency Group and Polychain Capital bet on what will be next in the world of crypto, a number of crypto projects have received significant funding. These projects include a social media app that turns celebrities into tokens and a pay-to-earn non-fungible token game inspired by Elon Musk.
“Investors are funding anything and everything,” PitchBook analyst Rob Le said.
Big Token
According to Bogart, the sudden emergence of niche sectors such as NFTs showed investors what they could be missing out on. The crypto expert noted that the NFT marketplace OpenSea is now showing comparable figures to the e-commerce site Etsy.
Crypto VC Shops in the U.S.
The $30 billion investment includes several funding rounds raised by large names such as Robinhood Markets Inc. and Revoult Ltd. But looking strictly at U.S. venture capital transactions also shows outsize investing this year with some $7.2 billion in deals, four times the previous record set in 2018, according to PitchBook data.
For example, crypto derivatives exchange FTX closed a $1 billion Series B funding round in July. This pushed its valuation to $18 billion. In mid-December, Custodian New York Digital Investment Group raised $1 billion generating a more than $7 billion valuation.
Forte, a provider of blockchain integration tools for game publishers, closed a $725 million fundraising round in November. Dapper Labs, the NFT platform behind CryptoKitties, raised $350 million in March from investors that included basketball legend Michael Jordan, pushing its valuation to $2.5 billion.
In late November, a $555 million round was secured by MoonPay which increased its valuation to $3.4 billion. Sky Mavis, the developer of Axie Infinity, raised more than $150 million at a $3 billion valuation in October for the crypto-based online game.
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