$30B invested in cryptocurrency by venture capitalists in 2021, the highest since the industry begun

• Over $30 billion has been placed in cryptocurrency and other blockchain projects by venture capitalists this year, exceeding all combined investments since the dawn of crypto.
• Crypto-related firms have received among the highest funding this year, from the likes of FTX exchange which raised $1B to reach an $18B valuation.

Despite regulatory concerns in a number of jurisdictions, cryptocurrency adoption has thrived this year, as shown by several reports. One such is from market research firm PitchBook.

Citing transaction data, the firm says venture capital funds have invested $33.7 billion in cryptocurrency in 2021. This surpasses all combined funds invested in crypto in all the years since its inception. This value has been accrued following a total of 1,217 deals this year. The previous record-high of funds invested in digital assets was $8 billion in 2018, a figure that has now multiplied fourfold.

“Investors are finding anything and everything,” PitchBook analyst Rob Le said.

Cryptocurrency and blockchain evolution

Over the years, the blockchain and cryptocurrency industry has grown from being merely a value exchange system. The sector now boasts of a wide range of projects, including non-fungible tokens (NFT) comprising art pieces, music, videos, and much more. These are hosted on entire marketplaces, the biggest of them being Ethereum-based OpenSea, which recently exceeded $10B in all-time sales. NFTs now mingle with blockchain-based play-to-earn games, with the lead platform being Axie Infinity. Additionally, social media apps have picked the new trend, giving fans value to pursue while celebrating their favorite public figures.

“We’ve moved beyond just digital gold. We’ve got financial services, art, gaming as a subcategory of NFTs, Web 3.0, decentralized social media, play-to-earn – all of that made investors think, ‘We don’t have enough exposure,’” noted Spencer Bogart from San Francisco-based Blockchain Capital LLC. His company is among the largest cryptocurrency investors, having financed over 120 crypto-related enterprises in the past eight years.

Support for crypto and blockchain-based offerings

PitchBook also reveals that in the US alone, transactions by venture capitalists quadrupled this year, totaling $7.2 billion in deals.

Among the top fundraisers of the year is cryptocurrency derivatives exchange FTX, owned by under-30 billionaire Sam Bankman-Fried. In July, the firm closed a $1 billion funding, raising its valuation to $18 billion. Custodian New York Digital Investment Group also raised $1 billion recently, and it is now valued at $7 billion. Vietnamese game maker Sky Mavis, which developed Axie Infinity, pumped its valuation to $3 billion in October. NFT creator Dapper Labs upped its valuation to $2.5 billion, having raised $350 million from investors such as basketball star Michael Jordan.

Additional reports show blockchain and cryptocurrency endorsement by political figures. Former first lady Melania Trump joined in on the NFT movement this month. Over the same period, Myanmar’s shadow government adopted Tether (USDT) stablecoin as its official currency. All this is despite disquieting news of US regulators seeking tougher laws on the industry, or India’s tentative cryptocurrency ban.