2022 has been scary for Bitcoin and many altcoins. That’s why many investors are wondering what to expect in 2023. Most want to see some recovery at least this year. However, a research company is not very hopeful, especially for some altcoins. Here are the details…
Warning for these altcoins
Last year was a big one for crypto venture capital, despite multiple high-profile meltdowns and the FUD (fear, uncertainty, and doubt) tsunami that followed. But a crypto researcher warns that funds may not flow so easily this year. According to Galaxy Research, the number and amount of investments made by venture firms in Web3 and crypto startups was just over $30 billion in 2022.
Alex Thorn, head of company-wide research at Galaxy, called it a “monster year” in 2021, eclipsed by $31 billion in VC investments. However, in a January 5 report, Thorn noted that macroeconomic and crypto market conditions led to significant investment declines in Q3 and Q4. Moreover, according to Thorn, this will likely continue until 2023, until macro and crypto market conditions improve.
Thorn noted that there were 2,900 venture deals in 2022, but in the fourth quarter the fewest deals and the lowest capital invested in two years. Thorn suggested that if this trend continues, crypto and Web3 firms may struggle to raise funds in 2023. “The macro, monetary and crypto asset landscape foreshadows a difficult year for all concerned,” he said. Examples of the largest web3 coins are Polkadot (DOT), Chainlink (LINK), Filecoin (FIL), Internet Computer (ICP), Theta Network (THETA), BitTorrent (BTT), The Graph (GRT), Casper (CSPR) , we can denote Stacks (STX), Loopring (LRC).
Many startups will need to cut their expenses
He added that falling company valuations and solidifying demands from investors will create a more difficult fundraising environment for entrepreneurs. “Startups will need to laser focus on the fundamentals to cut operational expenses and increase revenue in 2023,” he continued. According to the expert, the United States regulatory environment will also have an impact on this development. According to the report, over 40% of all crypto venture capital deals last year were related to a US-based startup. Thorn used the following statements:
The continued importance and leading position of the US for these markets provides ample reason for US policymakers to clarify and regulate the rules and regulations for the emerging space.
However, investor trends and crypto markets are cyclical. Gene Frantz, general partner of Google and Alphabet’s independent growth fund CapitalG, told Forbes last month that the 2023 year-end outlook and headlines will look much better than they do today. In a January 5 report, Crunchbase also spoke of a slower 2023 for venture capital across all industries, as we reported on cryptocoin.com. In 2022, global venture finance fell 35% compared to 2021, but the crypto industry remained buoyant throughout the year, offering a glimmer of hope for the next year.