Crypto Industry Sees 42.5% Funding Drop in 2022 Despite Positive Growth

• Cryptocurrency projects received 42.5% less funding in 2022 than they did in 2021, raising $21.26 billion.
• 2018, 2019, and 2020 saw significantly lower funding levels than in 2021.
• Several projects collapsed in the middle of the year, leading to reduced capital raised in the last quarter.

Cryptocurrency is one of the fastest-growing sectors of the global economy. In 2021, the cryptocurrency industry saw a significant surge in investments, leading to record funding levels. According to the recent CoinGecko report, however, the sector saw a 42.5% decline in crypto funding in 2022.

Crypto firms raised funds worth $21.26 billion last year, nearly half of which was secured during the first quarter. This amount is significantly lower than the $37 billion that was raised in 2021, but is still higher than the funding levels seen in 2018, 2019, and 2020. Prior to 2021, the highest amount of funding in a single quarter was $8.19 billion in 2018 Q2.

In May, Andreessen Horowitz, or a16z, secured one of the largest crypto financings in 2022, raising $4.5 billion. Katie Haun, a former a16z partner, and other investors, however, were not able to raise the same level of funding for their projects. This is a stark contrast to the $11 billion raised by a16z in 2021.

Unfortunately, several cryptocurrency projects collapsed by the middle of the year, such as the stablecoin Terra LUNA [LUNC], Three Arrows Capital (3AC), Celsius Network, and FTX, leading to reduced capital raised in the third and fourth quarters. This phenomenon has led to a decrease in the total capital raised in 2022, as compared to 2021.

Despite the significant decline in funding, the cryptocurrency industry has seen encouraging growth over the last five years. More projects have received financial backing, and institutional investors have shown increasing interest in the sector. This indicates that the future of the cryptocurrency industry is likely to be bright.