Crypto economics in Q3 2022: Summing up the numbers and facts by CB Insights — just how bad is it?

We have studied the latest “State of Blockchain Q3 2022” report from CB Insights, which describes the disappointing dynamics of the blockchain industry in the midst of the crypto winter. How bad is it? We’ve highlighted the most important things from this 141-page report in our review article.

Key conclusions in numbers

Global funding for blockchain and crypto startups fell 35% in Q3 from the previous quarter. Venture capitalists remained cautious amid the ongoing crypto-winter, rising inflation, and the Federal Reserve’s interest rate hikes. We wrote about the difficulties in the macro economy for crypto investing in detail in this study, a report from the CBI largely confirms the third-party conclusions.

You can read more about the report at this link. And here to quote briefly only the main figures and conclusions on Q3 from the CB Insights:

• A 35% drop in global blockchain funding. Blockchain venture funding fell to $4.6B, the second quarter-over-quarter (QoQ) decline this year.
• Drop in blockchain mega-rounds by 59%. There were only 7 $100M+ blockchain mega-rounds, the fewest in a quarter since 2020. The count plummeted from 17 last quarter and 28 in Q1’22.
• 1 of 4 new unicorns is a blockchain company. There were only 6 new blockchain unicorns in Q3’22, yet they still accounted for a quarter of the 25 total unicorn births across all industries.
• 195 new US blockchain deals were made. Flat QoQ. Nearly half of global blockchain deals went to US companies, the most of any region for the eighth consecutive quarter.
• Blockchain funding in Asia is down 60%. Asian blockchain funding plunged from $1.5B last quarter to $0.6B in Q3’22. A lack of big-ticket deals led to the decline, as no deals exceeded $50M. However, crypto still saw momentum in the region.
• 23 companies backed by Coinbase Ventures. Coinbase Ventures was the most active blockchain investor, backing 23 companies. FTX Ventures came second at 11, emerging as a new contender in the space.
• Funding to Web3 startups was $2.9B. Web3 accounted for over half of total blockchain funding for the third straight quarter. The category includes NFTs, gaming, metaverse, DeFi, and decentralized identity.
• Registered 74 deals in infrastructure & development. Blockchain infrastructure & development companies saw a record number of deals, increasing for the fourth straight quarter. Funding was down QoQ, but only by 12% — the smallest drop of any category tracked in this report.
• 67% transaction growth for cryptocurrency exchanges and wallets. Crypto exchanges & wallets saw 45 venture deals, a sizeable jump from the 27 in Q2’22 and the largest quarter since Q3’19. However, total funding ($0.5B) was the lowest since Q4’20.
• 64% drop in funding for institutional cryptocurrencies and depository services. Funding into institutional crypto & custody fell to $0.4B, the lowest since Q4’20. Crypto price crashes and bankruptcies cooled off institutional demand, which likely led to the funding fallout.

Examples of visual data

We selected some of the top lists from this study that we found especially interesting.

Global: Top equity deals in Q3’22

Global: Top unicorns by valuation in Q3’22

Global: Top investors by company count in Q3’22

Short conclusion

Almost all of the numbers in the report say one thing — the crypto economy continues to shrink. All companies in this field are now undergoing a kind of endurance test. Against the background of the general decline, even some sectors that showed at least some positive dynamics, such as crypto exchanges, look more like exceptions.

But if we try to find optimism in what we have, in conclusion, we should admit that the crypto industry is objectively established — according to CBI reports, large investment companies came into it. You can see it clearly even in the background of these negative current dynamics.