VC investments in cryptocurrency rose for the second straight month in May despite the generally declining economic backdrop. Funding amounts are up 34% since April, and the number of individual deals is up 62%, according to data from Cointelegraph Research Venture Capital Database.
Although inflation in the United States cooled from 4.9% in April to 4% in May (versus 9.1% in summer 2022), the US Federal Reserve raised interest rates 10 consecutive times. Declining inflation tends to build confidence among investors that inflation is controllable and that the Federal Reserve's actions will ease, but the market is still in the waiting phase.
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On June 14, the Fed. Announced would stop interest rate rises, which can become a bullish signal for financial markets, without exception of cryptocurrencies. Cointelegraph Research's VC database reveals that the VC cryptocurrency market saw $1.1bn in investments in May, the first month to break the $1bn mark since September 2022, and June is intended to serve as a crucial benchmark for continued growth in venture capital investment trends.
Blockchain infrastructure is still on top
Breaking down May's operations, the infrastructure sector continues to lead the market in capital inflows with $783.9 million in 23 rounds, more than 68% of the total money invested. In terms of the number of deals, Web3 leads the way with 24 deals done, but only $170.1 million in financing. Decentralized finance lost ground in May, with 20 deals and $93.6 million raised. Centralized funding was not attractive to venture capitalists, with only two deals totaling $24.8 million.
Top fundraisers in May included infrastructure solution developers Worldcoin and Auradine along with Web3's Magic project. from Worldcoin Series C Round of $115 million It had the participation of Spark Capital, Zoom Ventures, Sound Ventures, Salesforce Ventures, Menlo Ventures and Google and aimed to promote World App, its custody solution, and World ID, its decentralized identity solution.
Blockchain security and privacy provider Auradine increase $81 million in a Series A round backed by Marathon Digital Holdings, Celesta, Mayfield, Cota Capital and DCVC to promote "next-generation web infrastructure" with artificial intelligence and zero-knowledge proof solutions.
Web3 Magic got development and tools project a $52 million Series B deal with PayPal Ventures and Volt Capital as sponsors, among others. The funds are intended to expand the company's integration into the European and Asia-Pacific markets. As of June, the Fed's streak of 10 consecutive rate hikes has ended. That can send investment strategies back to risk, as short-term adjustments in interest rates significantly affect how capital is invested in traditional and decentralized finance spaces. However, VC activity is a lagging indicator and may experience tailwinds in the background of the news. To stay on top of VC activity, follow the Cointelegraph Research Venture Capital Databasewhich is updated weekly and tracks over 6,000 offers from 2012 to the present. The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific investment product or security.
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