Despite the summer months being slow for the cryptocurrency market, venture capital (VC) investment is starting to show signs of recovery. According to DeFiLlama data, crypto VC funding rose to $633 million in August, a 15% increase from the $550 million recorded in July. This suggests that investor confidence is starting to rise again despite recent market challenges.
VCs Turn to Blockchain Infrastructure
Luca Prosperi, CEO and co-founder of M^0 Labs, has observed a significant shift in VC interest in blockchain infrastructure development firms. Prosperi predicts that this trend will continue and investments will spread across different layers of the blockchain ecosystem. A Prize Pool Worth 21 Million TL Awaits You from BinanceTR! Participating and winning has never been easier.. You can sign up to BinanceTR from this link. Get your first crypto!
“Because we are in the early stages of development, we expect continued investment at the infrastructure level, the middleware level and the application layer,” Prosperi explains. “This is a period when everything can be reimagined to be the same as it was in the late 1990s and early 2000s.”
The increasing interest in blockchain infrastructure highlights the vital role it plays in advancing the technology. The increase in investment, especially in August, points to a possible shift in VC interest. Cryptocurrencies are gaining traction again after a period when the artificial intelligence (AI) sector was in the spotlight.
Crypto Sees Retreat from Overly Intense AI
VC activity in the crypto space had begun to wane, particularly in June, amid rising interest in AI-related startups. During that period, Sentient, an open-source AI platform developer, raised an $85 million funding round led by prominent VCs including Peter Thiel’s Founders Fund, Pantera Capital, and Framework Ventures.
However, the tide appears to be turning. Prosperi observes that as the AI sector nears saturation, some deep-tech investors are returning to crypto, partly fueled by the perception of a more favorable regulatory environment. However, he notes that there is no concrete evidence to support this narrative.
While blockchain infrastructure has attracted significant VC interest, the technology still lacks a widespread real-world use case that could drive mass adoption. Covalent CEO and co-founder Ganesh Swami emphasizes that more practical applications are needed to attract VC interest at the application layer.
Swami, Bitcoin $55,763.36 and notes that the approval of Ether-based exchange-traded funds (ETFs) could be a major catalyst for VC interest returning from AI to the blockchain space.
Despite the summer months being slow for the cryptocurrency market, VC investments showed signs of recovery in August. VC interest in blockchain infrastructure increased significantly, and a shift back to crypto began from the intense interest in AI. However, the lack of practical applications is holding back the widespread adoption of the technology.
Disclaimer: The information contained in this article does not contain investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
