The crypto industry, led by the flagship cryptocurrency Bitcoin (BTC), is going through a highly uncertain period and is striving to stay afloat despite the bad news. Although there have been many negative developments in 2023, the fact that the industry still holds a significant position promises a bright future. The fact that Bitcoin, especially the leading cryptocurrency, managed to stay above $30,000 is an important signal. However, funding rates do not indicate the same for BTC and other cryptocurrencies.
Crypto Industry Hits a Funding Drought
One of the most negative news of 2023 has been the funding situation. According to DeFiLlama, funding for crypto companies in the first half of 2023 remained at $3.7 billion. This is less than a quarter of the funding amount during the same period in 2022.
The significant decrease in funding is not surprising considering the period when Gary Gensler and other US regulators have been causing havoc in the crypto industry. The funding rate experienced a 75% drop in the first half of 2023 compared to the previous period, influenced by both regulators and situations experienced by exchanges like FTX.
The good news is that the funding rate indicator is actually a lagging indicator. Despite all the negative events, BTC price has gained an 85% increase this year. ETH, according to CoinGecko data, has also risen by 57%.
It’s Not All Negative!
Despite crypto Ponzi schemes, DeFi protocol hacks, and many other negative events, Wall Street is officially flocking to the crypto industry. Some of the world’s largest asset management companies, such as BlackRock, have made headlines with investment products focused on cryptocurrencies. Additionally, Fidelity has taken a similar step, and the corporate interest that has emerged during a period when funding hit rock bottom could be the calm before the storm.
Nevertheless, it can be said that the crypto industry is experiencing one of the worst funding rates in recent times, and money is drying up. It is argued that this has also dealt a blow to the overall development of the crypto industry. Many developments expected in 2024 could reverse the situation, such as the halving of BTC block rewards.
