Changes in crypto investment and financing in 2024: primary and secondary markets are decoupled, VC projects lose dominance

Author: Husband, Odaily Planet Daily

In 2024, the investment and financing enthusiasm in the encryption field will be decoupled from the broader market market, and VC coins will no longer dominate market performance.

At the macro level, the crypto market will usher in many historical moments in 2024, such as the launch of the Bitcoin spot ETF, the launch of the Ethereum spot ETF, the clarification of regulatory policies in various countries, the Federal Reserve’s announcement of interest rate cuts, and Trump’s upcoming return to the White House. Positive impact, Bitcoin successfully broke through the important mark of 100,000 US dollars.

From within the crypto market, memes have become the focus of market attention, and different meme types in different periods have become boosters for market increases. The performance of VC projects is sluggish, and the linear release cycle of tokens has become a chronic "poison" for VC projects.

Under the influence of comprehensive factors, primary market financing has increased significantly in quantity, but the amount of financing has been more cautious.

Looking back at the primary market investment and financing activities in 2024, Odaily Planet Daily found:

● The number of primary market financings in 2024 will be 1,295, and the total disclosed financing amount will be US$9.346 billion ;

● The AI ​​sector is showing its strength, and the number of Q4 financing in 2024 will surge ;

● The largest single investment amount was US$525 million in Praxis.

Note: Odaily Planet Daily divides all projects that disclose financing in Q1 (the actual close time is often earlier than the news announcement) into 5 major tracks according to the business type, service objects, business model and other dimensions of each project: infrastructure, application, technical services merchants, financial service providers and other service providers. Each track is divided into different sub-sections including GameFi, DeFi, NFT, payment, wallet, DAO, Layer 1, cross-chain and others.

2024 for BTC and meme coins

A comprehensive overview of the primary market financing in the past three years leads to an important conclusion: In 2024, investment and financing activities in the primary market have gradually decoupled from the overall trend of the crypto market. The market conditions are mainly dominated by the Bitcoin and meme sectors, while traditional VC The project performance is sluggish and it is difficult to become the core driving force of the market.

From the data analysis, 2022 is the peak period of the last crypto market cycle. Primary market financing activities are highly active, and changes in quantity and amount are almost synchronized with market conditions. In the first quarter of 2022, the number of financings reached 562, with an amount of US$12.677 billion. However, as the market entered a downward cycle, financing activities shrank rapidly. By the fourth quarter, there were only 330 financings left, and the amount dropped to US$3.375 billion.

2023 will be a continuation of the bear market effect, with financing activities in the primary market and the overall market also performing sluggishly. The number and amount of financing continued to decline throughout the year, falling to 232 and US$1.725 billion respectively in the third quarter, hitting their lowest point in the past three years. The primary market at this stage is obviously deeply affected by the trend of the market, and market sentiment and capital activity are suppressed.

2024 will become an important turning point for primary market investment and financing activities. Data shows that the number of financings has rebounded significantly. For example, the number of financings in the first quarter reached 411, an increase of nearly 69% from the fourth quarter of 2023. However, in contrast to the rebound in financing volume, the amount of financing was cautious, with the total quarterly financing amount throughout the year hovering in the range of US$1.8 billion to US$2.8 billion. This shows that although capital activity has recovered, investors are more conservative in investing funds, further indicating the decoupling characteristics of the primary market and the broader market.

Judging from the market popularity distribution, the crypto market in 2024 will be dominated by the Bitcoin and meme sectors, which is in sharp contrast to the performance of the previous cycle. In the previous cycle, VC projects were usually the core of market hot spots. However, the overall performance of VC projects in 2024 is sluggish and it is difficult to have a substantial impact on the market. This phenomenon makes the primary market lose its value as a reference indicator for the broader market.

The primary market in 2024 will show a trend of rationalization and independence. After experiencing the craze of 2022 and the cold winter of 2023, investors are obviously more cautious and pay more attention to the actual quality and long-term value of projects instead of blindly chasing market hot spots. This change may indicate that the primary market is gradually breaking away from the traditional encryption market cycle and entering a new stage of development.

The increase in the number of financing and the cautious amount reflect that VC institutions are more inclined to diversify their investments and be more conservative in capital allocation. This attitude shows that the return of market enthusiasm has not brought about large-scale capital inflows, but has prompted investors to pay more attention to projects with real potential. In other words, the primary market is no longer just a "follower" of market trends, but has begun to play a role in shaping the future market structure.

The number of primary market financings in 2024 will be 1,295, and the

total disclosed financing amount will be US$9.346 billion

According to incomplete statistics from Odaily Planet Daily, a total of 1,295 investment and financing events occurred in the global encryption market in 2024 (excluding fund raising and mergers and acquisitions), with a total disclosed amount of US$9.346 billion, distributed in infrastructure, technical service providers, financial services Among them, the application track received the largest number of financings, with a total of 606; the infrastructure track received the largest amount of financing, with a financing amount of US$3.976 billion. The two lead other tracks in terms of financing amount and quantity.

Judging from the picture above, the application track, as the area closest to end users in the encryption industry, has always been the focus of the primary market. In 2024, the financing performance of the application track will achieve double growth compared with 2023, with the number and amount of financing increasing by approximately 20% year-on-year.

The financing performance of the infrastructure track in 2024 is particularly eye-catching. The number and amount of financing have increased significantly compared with 2023, with an increase of more than 50%. Behind this growth is not only the encryption industry’s demand for continuous upgrades of underlying technology facilities, but also the rise of emerging fields such as AI (artificial intelligence) and DePIN (decentralized IoT networks), which have brought new challenges to the infrastructure track. development opportunities.

In general, the investment and financing activities in the global encryption market in 2024 show distinctive characteristics. The application track and the infrastructure track are leading in quantity and amount, indicating the market 's dual demand for end-user experience and underlying technology upgrades. At the same time, technology service providers, financial service providers and other service provider tracks are brewing new opportunities amid steady development, especially the financial service provider track, which is expected to usher in new breakthroughs in 2025 with the entry of mainstream finance.

The AI ​​sector is showing its strength, and the number of Q4 financing

in 2024 will surge

According to incomplete statistics from the Odaily Planet Daily, financing events in the segmented tracks in 2024 are concentrated in DeFi, underlying facilities and games, with 289 deals in the DeFi track, 236 deals in the underlying facilities track, and 160 deals in the GameFi track.

Judging from the distribution of financing status of sub-tracks:

Looking at the segmented tracks in 2024, the DeFi and underlying facilities sectors continue to maintain steady growth, ranking first in both total financing amount and quantity. This shows that the market demand for decentralized finance and underlying technology is still strong. Whether it is the innovation of new protocols in DeFi or the continuous optimization of underlying facilities such as multi-chain interoperability and blockchain security, they have become the focus of capital attention.

In contrast, the game sector performed well in the first three quarters, ranking among the top three in terms of financing volume. However, it suffered a significant decline in the fourth quarter, with only 29 projects announcing financing information. This trend reflects the periodic weakening of GameFi 's popularity, and the market is more cautious about its short-term profitability and user growth prospects.

At the same time, the popularity of the AI ​​sector is rising rapidly, becoming a highlight in 2024. In the early days, this track often developed together with other fields (such as DeFi and infrastructure) and was not divided separately. However, starting from the third quarter, the AI ​​sector gradually came to the fore, especially in the fourth quarter, when both the number and amount of financing doubled. The market has shown great concern for the application potential of AI+blockchain, and the rise of AI Agent has further ignited the enthusiasm of capital for investment in this track.

The largest single investment amount was $525 million in Praxis

It can be seen from the list of the Top 10 financing amounts in 2024 that despite the fluctuations in the market environment, investment institutions' confidence in infrastructure projects remains strong. Almost all of the top ten projects focus on underlying technology and innovation directions, demonstrating the institution 's high expectations for the future development of this type of track.

L1 public chains still attract large-scale financing. On the list, in addition to the established public chain Avalanche, which completed a private equity round of financing of US$250 million, emerging projects such as Monad, Berachain and Babylon have also shown strong growth momentum. These projects have won the attention of investors through technological innovation and ecological expansion.

Praxis is the financing champion in this list, having received an investment of up to US$525 million. However, the specific development direction of the project is still relatively vague. It is mainly managed in the form of a DAO organization. To enter the DAO, you need to apply, which limits the disclosure of relevant information.

It’s worth noting that Paradigm’s dominance of the list is clear. As a top venture capital institution, Paradigm has led the investment in three major projects on the list - Monad, Farcaster and Babylon.