The cryptocurrency industry saw a decline in the first quarter of 2023 as compared to the previous year, with both the total amount invested and deals completed seeing a decrease from the same period in 2022. According to the Pitchbook crypto report, there was a 12.2% and 11% decline in the quarter-on-quarter total number of deals and deal value, respectively. It also was the fourth consecutive quarter where investment activity decreased and this quarter saw the lowest capital invested and deals completed since Q4 2020.

However, despite the declining investments, the report indicates that the crypto space has seen positive outlooks and growth in certain areas. For example, Layer-2 (L2) scaling solutions continued to build on the momentum they saw during 2022 and attracted more investment. Blockstream, a Bitcoin scaling platform, raised $125 million convertible note and debt round to build their Bitcoin mining infrastructure, which was preceded by a $163 million Series B funding round in August 2022.

Another example of increasing investment in Q1 2023 was with crypto custodial services, which have seen an increase in demand for self-custody. Ledger, a hardware wallet manufacturer, secured $109 million in a Series C extension funding round to optimize and expand their wallet production, with plans to conduct two more rounds before the year ends. Swiss crypto firm Taurus also raised $65 million in a Series B funding round from notable financial institutions such as Credit Suisse and Deutsche Bank.

The overall investment trends for the quarter, according to the PitchBook crypto report, were mixed: seed and late-stage rounds were up 33.3% and 209% compared to 2022 but early-stage rounds decreased by 16.7%. Nonetheless, investors are still participating in the crypto space and are able to close deals and make significant investments in the sector. While the 2022 crypto winter persists, the report offers insights that indicate that the cryptocurrency industry can scale beyond the pandemic's effects.



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