More investment flowed into cryptocurrency in Q1 2021 than in the entire 2020. According to CB Insights data, large investments from venture capitalists flowed into crypto firms such as BlockFi, Dapper Labs and, Blockchain.com.
As per data, 129 startups in the blockchain space raised roughly $2.6 billion in Q1 alone. This is bigger than the $2.3 billion raised by 341 startups in the whole of 2020.
Investors gaining confidence
2020 was one of the most bullish years in the history of cryptocurrency. The price of Bitcoin and other cryptocurrencies rose sharply towards the end of the year, breaking several new highs. At the time, though, it seems the VCs were waiting on the sidelines to see what happens. The bullish move continued in 2021 and has mostly been sustained, thus boosting their confidence.
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Tesla’s investment in Bitcoin was also a great motivator that opened the door for more investors to come in. The influx so far is unprecedented, and more confidence-boosting strides may be on the way.
For instance, Coinbase, the largest cryptocurrency exchange in the United States, has moved to get publicly listed. This could greatly increase VCs’ willingness to invest in the crypto space, which means much more capital flow.
Crypto market showing growth
Bitcoin and some top cryptocurrencies such as Ethereum have been growing this year as a reflection of the capital inflows.
Bitcoin reached a new all-time high of $60,000 last month, and after a pullback, it is back close to the record high. Ethereum also hit a record high of $2,000 in February before retracing but is now back above the level again.
With the rapid growth in the crypto space, analysts have set high expectations for cryptocurrencies, but time will tell if these expectations will be confirmed.
