Is Blockchain Venture Capital Dying? The $8B Reality Behind Tokenization And Stablecoin Shift
Seasoned crypto investors know narratives can flip overnight. One year it’s token launches and meme-fueled rallies. The next, it’s stablecoins and real-world asset tokenization. After a brutal liquidation cascade in October and Bitcoin’s (CRYPTO: BTC) 45% pullback from its highs, venture capital hasn’t disappeared — it has narrowed its focus. The era of narrative-driven token bets is fading. Infrastructure tied to real revenue is taking its place.
“Blockchain venture as we know it is dead,” said Gil Rosen, Co-Founder of the Blockchain Builders Fund. “The narrative driven, community building, token pumping projects haven’t been sustainable and many of the binance alpha projects have struggled. With AI and metals being high growth and speculative, many of the gamblers have also left the market.”
The money flow is steady, not quite dead.
Venture capital firms invested roughly $8 billion into crypto and blockchain-related companies, the most investment since 2022, said Alex Thorn, Head of Research at Galaxy. Galaxy has become a go-to hub for investors looking for market trends.
Deal counts are still below 2022, Thorn wrote in a report dated Feb. 3, predicting hard times ahead for fund managers looking for new ideas. Bitcoin’s losses could slow investments in blockchain and crypto projects once the first quarter is through, Thorn wrote.
“The October 10 selloff triggered the largest liquidation cascade in crypto history – larger than during both the Terra/Luna collapse and the FTX unwind – with more than $20 billion in notional positions wiped out,” said Cosmo Jiang, a general partner at Pantera Capital. “Markets needed time to digest that shock,” Jiang wrote in his recent market outlook published in January on the firm’s website.
Traditional Finance is Taking Over
Blockchain isn’t going away as a technology. It is gaining some adoption (see Ripple and Japan’s SBI Holdings), and has gained meaningful traction across stablecoins, yield products, and traditional finance is enamored with tokenization of real world assets.
At the World Economic Forum in January, BlackRock founder Larry Fink kept to his “tokenization is necessary” …
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