Both founders and investors reported a more active fundraising environment compared to previous quarters. Although this news increases the optimism of investors in the cryptocurrency space, the data in the report also reveals some points that cast a shadow on this optimism.

Galaxy analysts Alex Thorn and Gabe Parker said in the report published on Tuesday that “the data obtained seems a little less clear compared to the generally positive mood.” When we look at the statistics in the report, we see that the number of agreements decreased from 603 in the first quarter to 577. The investment amount shows a positive development, increasing from 2.5 billion dollars to 3.2 billion dollars.

There is also a slight increase in average deal size. This number has reached 3.2 million dollars. However, the most striking point is the increase in average pre-investment valuations.

This value rose to $37 million, approaching all-time highs, as noted in the report. This seems to indicate that the revival in the cryptocurrency market in recent quarters has led to significant competition and “fear of missing out (FOMO)” among investors.

The Galaxy report also reveals that the traditional correlation between capital invested in cryptocurrency startups and the price of Bitcoin (BTC) has been broken. While Bitcoin, the world’s largest cryptocurrency, has increased significantly since January last year, venture capital investments seem to be struggling to keep up with this increase.

The report lists the successful entry of spot Bitcoin exchange-traded funds (ETFs) into the market in January, the emergence of Bitcoin layer 2s, regulatory challenges to cryptocurrencies, and negative developments in the macro economy as factors contributing to this deviation.

Galaxy’s data shows that the amount of capital invested to date has increased but remains well below the levels seen between 2021 and 2022, when Bitcoin traded above $60,000. This indicates that the cryptocurrency market has not fully recovered yet.

Additionally, the report states that early-stage cryptocurrency startups received 78% of investments. The remaining 20% ​​is reserved for later stage companies. These data reveal that larger and more mainstream venture capital firms are leaving the industry or significantly reducing their operations. This situation causes later stage startups to have difficulty finding cash.

Finally, the Galaxy report makes a positive prediction for investors. According to the report, institutions issuing funds may be preparing to return to the market due to the resurgence of liquid cryptocurrencies. This indicates that there may be more investment activity in the cryptocurrency venture capital market in the second half of the year.

The Galaxy report reveals both positive and negative developments in the cryptocurrency venture capital market. Although the increase in the amount of investment and the optimism of investors are positive signs, factors such as the break in the traditional correlation and the difficulty of finding funding for later-stage startups also increase the uncertainties in the market.