Due to macroeconomic factors, the inflow of risk capital into cryptocurrencies further declined.

Risk capital inflow into cryptocurrencies declined due to macroeconomic factors.

Source: COINTELEGRAPH RESEARCH; Translation: Song Xue, LianGuai

According to data from Cointelegraph’s venture capital database, capital inflows from venture capitalists in July decreased by 10.26%, raising a total of $700 million. In the past two months, venture capital has rejected potential upward trends, as macroeconomic conditions surrounding the Federal Reserve’s interest rate hikes and geopolitical events seem to have a more significant impact on venture capital decision-making.

In light of this, many companies are using the majority of their reserves to mitigate risks, while some companies are allocating a portion of their capital to value investments. Generally, venture capitalists carefully review each new project, looking for potential investment opportunities and preferring to follow smart money rather than taking risks in the dark.

However, the cryptocurrency venture capital field is not entirely bleak. Polychain Capital launched a $200 million investment fund IV in July, and CoinFund launched a $152 million seed fund IV in July. In the current situation, they can be considered notable outliers. In contrast, only three cryptocurrency funds were launched in June, raising less than $100 million in total.

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The hype surrounding the possible approval of Bitcoin exchange-traded funds (ETFs) in the United States is also heating up. If approved by the SEC, it could revitalize the industry and drive the next cryptocurrency bull market. This approval could send an encouraging signal to cryptocurrency venture capital and attract more attention and capital to the industry. However, it remains to be seen whether this will reverse the investment trend.

Infrastructure and Web3 Leading the Way

In terms of transaction volume, Web3 has always been one of the most active industries, and July was no exception, with a total of 26 transactions raising $256.2 million. Conversely, the infrastructure sector has recently attracted the most capital inflows and will continue this trend, with 24 transactions in July raising a total of $279 million. Decentralized finance closely followed, investing $140.1 million in 19 transactions, while centralized finance and non-fungible tokens (NFTs) once again dropped off the list.

Polygon and Binance Labs participated in four rounds of funding in July. Interestingly, 0xBoost Finance, Aethir, Dappos, and Delabs Games attracted investments from multiple well-known investment firms, including Polygon, Binance Labs, and HashKey Capital, among others.

However, these are not the projects that raised the most funds. Web3 startup Zyber 365 ranks first with $100 million in Series A financing. This round of financing has made Zyber another fintech unicorn with a valuation of over $1.2 billion, and the funds are intended to drive global expansion.

Infrastructure solution provider Flashbots is mainly focused on reducing the negative impact of maximum extractable value on the Ethereum blockchain and has successfully completed $60 million in Series B financing from companies such as Sanctor Capital, HashKey, and Animoca. At the same time, artificial intelligence (AI) metaverse startup Futureverse has successfully completed $54 million in Series A financing from 10T Holdings and Ripple. Futureverse is a combination of 11 startups from various fields such as blockchain, artificial intelligence, NFTs, and gaming, aiming to expand the company’s ecosystem.

The upward trend in July did not continue, resulting in a continuous one-month downward trend in investment. Investor activity is low, and although the positive sentiment of Europe and the United States approving Bitcoin and Ethereum ETFs may change the venture capital landscape, it is unlikely that the blockchain industry will quickly recover a stable upward trend.

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