Venture investment into crypto startups plummeted 68% year-over-year to $10.7 billion in 2023— down sharply from 2022's $33.3 billion.

The dramatic pullback was largely expected given punishing macro headwinds, fallout from major failures, and an uncertain regulatory environment. Still, 2023 funding topped previous crypto bear market years, handily exceeding the ~$6B invested in 2019 and 2020.

Mirroring the late-stage retraction, deal count also slowed 32% to 1,819 in 2023. However, the proportion of early-stage rounds increased as investors shifted focus to pre-seed, seed, and Series A bets.

NFT/gaming, infrastructure, and Web3 maintained dominance by deal count, while verticals like data, trading, and enterprise witnessing fewer completed rounds.

So while a necessary correction, the sheer intensity of shrinking liquidity surprised many. Investors and founders seem to have embraced the market purge to step back and reassess core priorities before broader industry growth resumes.

The Block