$2.3 Billion Crypto VC Investment Lags Bitcoin Price Increase, Here’s Why
Crypto venture capitalists have not been keeping up with the Bitcoin (BTC) price increase lately. Generally, crypto VCs’ investments are in line with the change in Bitcoin price, but this was not the case in the first quarter of FY24. However, venture capitalist investment in crypto has increased significantly.
Crypto VC Investment and Bitcoin Price
According to Galaxy Research data, venture capitalists invested approximately $2.3 billion in the crypto market in the first quarter. Bitcoin price witnessed a parabolic rise above $73,000. Given historical trends, these institutional investors would have to deposit approximately $14 billion to keep up with the rising BTC price.
Although the Crypto VC Investment amount increased from under $2 billion, the gains were not as high as expected. Previously, after the all-time high of $69,000 for Bitcoin in November 2021, venture capitalists poured $12 billion into the market in the first quarter of 2022.
The potential reason for this unsatisfactory amount of crypto venture capitalist investment could be new trends in the market. These include the launch of Spot Bitcoin ETFs, crypto re-staking, and uncertainty regarding Federal Reserve interest rates.
Moreover, venture capitalists could choose to invest in Spot Bitcoin ETFs instead of holding BTC directly. However, as of now, these investors have yet to disclose their holdings on Form 13F before the May 15 deadline. Therefore, it is not confirmed whether they are actually considering the ETF option or have chosen to limit their crypto investments due to market uncertainties.
Also Read: Hong Kong Bitcoin ETFs Accumulate $258 Million in BTC in First Week
BTC Price Passed $63,000
Bitcoin price dropped to $56,000 this week and eventually recovered. At the time of writing, the BTC price increased by 8.13% to $63,729.73 on Saturday, May 4. Additionally, the oldest cryptocurrency had an impressive market cap of $1.25 trillion.
Additionally, Bitcoin’s transaction volume increased by 9.48% in the last 24 hours to $32.07 billion. The latest rebound comes amid positive US jobs data and a resurgence of Bitcoin ETF inflows. On Friday, May 3, for the first time since launch, all Spot Bitcoin ETFs, including Grayscale’s GBTC, recorded inflows. Additionally, an inflow of $378 million was recorded in these ETFs.
Also Read: Grayscale Bitcoin ETF Ends 77-Day Outflows, GBTC Inflows Begin
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