Bitcoin bounces back above $43,000: CNBC Crypto World

CNBC Crypto World features the latest news and daily trading updates from the digital currency markets and provides viewers with a look at what’s ahead with high-profile interviews, explainers, and unique stories from the ever-changing crypto industry. On today’s show, PitchBook’s Robert Le takes a look back at crypto venture capital funding in 2023 and provides his outlook for 2024.

Chapters:
00:00 – CNBC Crypto World, Dec 20, 2023
0:21 – Crypto climbs
0:44 – The headlines
2:59 – PitchBook’s Robert Le

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Bitcoin bounces back above $43,000: CNBC Crypto World

Today Bitcoin Rises back above $43,000 the SEC Black Rock and the NASDAQ meet once again to hammer out just how a spot Bitcoin ETF would work and pitchbooks Robert Le gives his outlook for crypto Venture Capital investments in 2024 welcome to cnbc’s crypto world I’m Talia Kaplan cryptocurrencies moving

Higher this morning Bitcoin jumped more than 3% by noon Eastern now trading back above $43,000 ether also climbing it’s back above $2,200 polygon’s madic token also got in on this morning’s gains rising to 78 cents okay let’s talk about the top stories coinbase CEO Brian Armstrong has

Been a strong advocate for crypto in Washington this year and he’s pushing to move the needle on crypto regulation even more next year he spoke to cnbc’s Tech check on Tuesday and explained why he donated to a group of crypto focused political action Comm committees that

Are heading into the new year with more than $78 Million ready to deploy the goal of that pack is to elect Pro crypto and pro-innovation candidates in 2024 and there’s 52 million Americans out there who have used crypto now that’s five times the number that have a union

Card it’s three times the number that have used an electric vehicle and so this is a massive constituency and they don’t feel like their voices are being heard in DC so I think it’s time to uh make sure that people know that being anti- crypto is just bad politics in DC

Now Armstrong has warned that he thinks crypto Talent could leave the us if Regulators get crypto rules wrong next the SEC just met with black rock and the NASDAQ again over the asset manager filing for a spot Bitcoin ETF in a memo published yesterday the SEC said it

Meant to discuss how the proposed ETF would trade on the NASDAQ under the exchanges commodity rules late last month memos revealed that the SEC also met with other asset managers including grayscale ahead of the much anticipated decision the SEC also met with black rock last month and presented the agency

With backend details of how the proposed ETF could work last epic games is bringing back blockchain based games to its Marketplace the epic games store announced that Gods Unchained and Striker manager 3 which are play to earn blockchain games have returned to the marketplace after epic updated its policies normally epic doesn’t allow

Games rated as adults only but the gaming giant told us that some blockchain games were rated adults only because they were blockchain games going forward epic said the store policy will allow games rated adults only solely due to the usage of blockchain and nft Technology all right for our main story

We take a look back at Venture Capital funding in crypto this past year investments in digital assets startups have continued to drop in the third quarter according to pitchbooks latest crypto report so I spoke with the research firm’s crypto analyst Robert Le about what factors are behind the

Downward Trend and what we can expect in 2024 pitchbook released its Q3 crypto report last month revealing that Venture Capital interest in crypto declined in the quarter with a 28% drop in funding and a nearly 25% decrease in Deal count the lowest level since late 2020 the reports findings highlight that VC

Funding for crypto startups remains challenging after a rocky year so what is contributing to that sentiment yeah so this has been the ongoing theme for the year is that vors have pulled away from investing in the crypto space um generalist investors have moved to other areas like Ai and

Health Tech and climate but um we still see the um Native crypto investors really stayed in the space and they’re still doubling down in the space the only thing is that the pace of investing has slowed down so they’re not investing as as a at a higher clip as they did in

2021 and early 2022 but um I want to copy out that a little bit is that there’s a little a little bit of a lag in the data so you’re we see a low in in the data but anecdotally and our conversations with Founders and investors is that fields are picking

Back up so um Founders are having an easier time um meeting with investors and finding investors to come and speak with them and look at their companies and then investors are actually out there speaking and writing checks at this moment so you we suspect that you’re going to see that uptick in

Investment data reflected next quarter or the quarter after so there’s a little bit of a lag but so even though we see a low in Q3 we suspect that the low really happened a quarter or two ago expanding on that recently we have seen major cryptocurrencies reach fresh highs for

The year so do you think the moves higher have been influencing Venture Capital funding in the space are investments still on the decline so far in Q4 or are there signs that things are turning around have you seen any of the data I know you said you spoke with

People but have you actually seen any of the data that shows that things are in fact turning around the last few times we spoke you were optimistic that the trend will Reverse by the end of the year so are you starting to see this

Now yeah we we um in the data not yet um but like I said the conversations that we have with Founders investors we do see that and you know over the last probably three years or so we’ve seen and I think we spoke about this uh previously that um there a correlation

Between the public uh token uh valuation and private Market Investments and you know we’ve seen um the public market cap of all the crypto tokens this year is up and so um we expect that and there’s a little bit of a lag as well in terms of the correlation typically the Bitcoin

Eth and all these alternative tokens they go up and about six months later you see Investments also take back up as well we suspect that we’re going to start seeing that also so um because public uh crypto tokens are up we think that has helped um investors become more

Optimistic in this space and and they’re looking to invest more of their capital and when we spoke before you noted that a lot of dry powder in the crypto space exists and that investors have raised billions of dollars in crypto investment funds over the last couple of years a16z

Has a multi-billion dollar fund that still has a good amount of capital left and when we spoke this year you noted that the capital will have to be invested over the next few years and so I’m wondering when do you think that will happen exactly what will it take

And what would that do for the crypto industry as a whole investors have raised tens of billions of dollars in these crypto Focus funds to invest in this space they’re collecting management fees during this time so what are they collecting these management fees if they’re not investing I mean that is

Really their mandate is to invest this Capital so they can’t sit on this Capital forever um they have to deploy that and you know because we if you look look at they about a year already of them not investing at the clip that they need to to Really deploy all those funds

You’re looking at roughly you know 25 to30 billion dollars of capital that needs to be deployed over the two to threee period of it was raised last year so now you’re looking at more they have one to three years to to invest this Capital so you’re going to start seeing

More Investments uh increase in the coming years now following that multi-billion dollar settlement between binance and US government officials last month you argued that the development marked a pivotal moment for the crypto industry and highlights the need for crypto exchanges and other entities in the sector to prioritize Regulatory

Compliance and adhere to established Financial laws and standards what else does the enforcement action signal to the crypto industry and what is the impact on the space yeah the the main thing it says is that you have to work with regulators um you know we’ve said this for the long

Time and you know coinbase it it’s really um they’re the leader in the space the way that they have um enter in a jurisdiction the way that they have engaged with Regulators very early on and the way that they um only release products that they feel are law abiding

Law abiding or um selling to customers who who they’re allowed to sell to um you know a lot of crypto chers didn’t do that not just crypto exchanges and a lot of centralized players so we saw all these crypto lenders right like Roi and Celsius that offered a a products that

Were in this regulated gray area coinbase has not done that and they’ve been the leader in the space and we think that any new uh crypto product or or project or entity that comes into the space who are offering services today they just have to find a way to work

With Regulators there’s just really no way around that what areas of crypto or blockchain technology are attracting the most VC dollars right now yeah so we see a few we still see a lot of centralized uh services like exchanges and wallets that are uh raising a lot of capital and also gaming

And and that that really surprises I think for one way or another gaming is has been one of the strongest areas of funding in 2023 um investors they primary thee is that gaming is going to be the primary entry point for uh users into web 3 and

So because if that’s the case you’re looking at billions of users moving into web 3 over the next few years and their entry point is through gaming that’s where they’re expecting to see most of the growth and most of the um you know um Capital that’s being uh generated in

In the web 3 space so gaming you’ve been seeing a lot of Investments as well now according to to pitchbook Hong Kong and Singapore have been attracting more crypto VC funding because of their favorable Regulatory regimes and Licensing Frameworks the research firm noted that 11% of all VC investment in

Digital assets and blockchain Technology went to firms based there compared to just 2% of total deal value during crypto’s 2021 Bull Run so what does that signal to you yeah it’s it is really where the startups are going to be building and even though we’re still pretty bullish

In the US market we believe that a lot of the talent is still here you’re starting to see pockets of innovation pop up and a lot of that it’s around how favorable the regulations are and you know Hong Kong and Singapore um you’re starting to you’re I we expect after

Mika um be becomes implemented next year you’re going to see in Europe as well so the longer us regulators and lawmakers uh delay writing specific rules for crypto and web 3 the more you’re going to see talent and Innovation move abroad um it’s going to be a slow tick just

Because it’s not very easy for a US founder just to leave get up and leave and go to another country and start building but it’s over a very long period of time you’re going to see the US lose to those areas because we have very strict regulations okay that’s all for crypto

World today but we’ll be back again tomorrow and we’ll see you dead