PitchBook: global crypto startup funding was $2.34B across 382 deals in Q2 2023, down for the fifth straight quarter; valuations fell nearly 70% YoY in H1 2023
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Context & Ripple Effects
This is the fifth consecutive quarterly decline in PitchBook's series: after the record $9.85B peak in Q1 2022, funding slid through $6.76B in Q2 2022 and $4.44B in Q3 2022 before landing at $2.4B in Q1 2023 — so Q2 2023's $2.34B across 382 deals is essentially a plateau at post-boom lows rather than a new leg down.
The sharper signal is price, not volume: valuations down nearly 70% YoY in H1 2023 means generalist VCs who marked crypto positions at 2021-22 levels are now facing markdowns on both entry prices and exit prospects.
First-order effects
- Crypto startups raising in H2 2023 face down-round pricing against a ~70% valuation reset, forcing either smaller raises or longer gaps between rounds.
- VCs still holding 2021-vintage crypto portfolios see mark-to-market losses compound as deal volume dries up, reducing their appetite for follow-on checks into existing positions.
Second-order effects
- With broad consumer and trading-facing deals starved of capital, investors concentrate on fewer, deeper bets — the infrastructure focus visible in later PitchBook data (Q3 2024's $1.7B quarter) shows where the survivors of this squeeze clustered.
- Crypto founders competing for a shrinking pool of venture dollars push toward revenue-generating business models over token-appreciation narratives, since flat $2.3B-level quarters leave no room for story-driven valuations.
Third-order effects
- Regulatory clarity alone does not refill the pipeline: by Q1 2025, US crypto VC fell 22% QoQ to ~$1.3B even under a friendlier environment (the 2025 PitchBook read), suggesting the sector's funding base has structurally reset below its 2021-22 peak.
- If the pattern holds, crypto becomes a mid-sized, infrastructure-weighted venture category rather than a headline magnet — with marginal startups consolidating or winding down while capital concentrates in picks-and-shovels plays.
The trend: Venture capital is permanently repricing crypto downward while rotating its largest checks toward AI, leaving crypto funding flat near post-boom lows even as regulation improves.