According to reports, venture capital investors may be playing it safe by investing in core technologies that actually offer innovation to the cryptocurrency sector.
And other major cryptocurrencies drop 50% or more of their value, can be linked to this short-term investment fall.
According to fresh statistics from Dove Metrics, overall venture capital investment in cryptocurrency fell 38.2 per cent in the last month, from $6.8 billion in April to $4.7 billion in May, although increasing by 97.8% year over year.
Infrastructure firms grabbed 21% of the pie, while decentralized finance (DeFi) startups garnered 14%, according to data on investment allocation. Projects involving centralized finance (CeFi) and nonfungible tokens (NFT) each accounted for 13% of the total.
This suggests that instead of riskier ideas, venture capital investors may be playing it safe by investing in fundamental technologies that genuinely bring innovation to the crypto market.
Xendit, a Southeast Asian payment gateway service, and Lithosphere, a next-generation network for cross-chain decentralized apps, both raised $700 million as instances of this investment trend.
In May, Sam Bankman-Fried, the founder of the prominent crypto exchange FTX, made the highest investment, investing $650 million in the popular trading platform Robinhood, securing 7.6 percent of the company's shares.
Other notable investments include Chainalysis, a well-known analytics firm, and KuCoin, one of the largest cryptocurrency exchanges, both of which raised more than $150 million each.
The United States is the top source of venture capital investments, followed by Singapore and Hong Kong, according to data, which is consistent with the global trend for VC.
Andressen Horowitz, a leading venture capital firm, has raised $4.5 billion for Web3 projects, raising its total crypto investment portfolio to $7.6 billion. In the past, the firm has backed a number of successful projects, including Coinbase and Solana.
NGC Ventures, a Singapore-based business that just secured $100 million for "high-potential initiatives" in the Web3 domain, is another significant name. Algorand and Oasis are two of their earlier successful ventures.
Despite the present crypto bear market, venture capitalists appear to be busier than ever, with JPMorgan claiming that the recent Terra ecosystem meltdown had little impact on VC. This demonstrates a long-term belief in the evolution of crypto and blockchain technology, with cutting-edge solutions like Web3 and DeFi taking the lead.
