In 2023, Crypto Firms Experience Drastic Decline in Funding
In 2023, the crypto industry saw a significant decrease in funding compared to the previous year. While the market itself recovered, with Bitcoin experiencing a rally of over 150%, the collapse of major firms like Terraform Labs and FTX had a major impact on the overall crypto market.
This decline in the market led to a decrease in interest from Venture Capitalists (VCs) who turned their attention towards Artificial Intelligence (AI) instead.
Did AI Hype Cause a 70% Decline in Crypto Fundings?
According to DefiLlama’s data, crypto funding experienced a drastic decline in 2023. In 2022, crypto companies raised approximately $22 billion, with the highest funding being around $3.677 billion in March.
However, in 2023, the total funds raised only amounted to around $6.25 billion, marking a decline of over 70% compared to the previous year. February 2023 had the highest funding of approximately $877 million.
This decline in funding put many firms at risk of closure or forced them to resort to layoffs due to insufficient financial support.
AI Companies Thrive in Funding
On the other hand, AI companies experienced significant funding in 2023. The rise of AI chatbots like ChatGPT and Bard attracted investor interest and resulted in substantial investments.
Data from Q3 2023 shows that AI firms raised approximately $33 billion throughout the year.
Hot Take: AI Takes Center Stage as Crypto Funding Declines
The decline in crypto funding in 2023 highlights the shifting interests of investors towards AI. While the crypto market faced setbacks, AI companies thrived and attracted substantial investments. This trend suggests that AI is currently at the forefront of technological innovation and has become a popular choice for investors seeking growth opportunities. As the market continues to evolve, it will be interesting to see how these two industries intersect and influence each other in the coming years.
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