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BTC was the best performing asset of the quarter.
Q1 experienced highs and lows, including Fortune 500 companies entering Web3 and the disruption of crypto-friendly banks. Meanwhile, ETHDenver saw the largest attendance in its history.
The amount of venture capital deployed into startups has decreased, while the number of funded startups has increased, when compared to the previous quarter.
Current trends include: user experience, account abstraction, decentralized identifiers, no-code/low-code platforms, compliance & policy, and NFT financialization.



BTC closed Q1 with a 72% increase, making it the best performing asset in Q1.

The second-best performing asset was Nasdaq 100 at 19%.

For comparison, the S&P 500 gained 5.5% in Q1.

Total Crypto Market Cap Q1 2023

BTC Price in Q1 2023



Q1 brought a rollercoaster of highs and lows, from Fortune 500 companies entering Web3 to the disruption of crypto-friendly banks. Meanwhile, ETHDenver saw the largest attendance in its history.



VCs invested $2.4bn into Web3 startups in Q1 2023, down since Q4 2022. 439 startups were funded in Q1, up from 366 in Q4 2022. The median deal size was $2.5m, and median pre-money valuation was $18.8m across all stages. 42% of Q1 funded startups were headquartered in the United States, despite the uncertain regulatory environment.

Web3 VC Deal Count &. Capital Invested

Web3 VC Valuation & Deal Size

The overall bearish market conditions, rising rates, and 2022 Web3 venture-backed startup blowups (ex. FTX, Celsius, Voyager) have led to a difficult fundraising environment for Web3 VCs. Because of this, VCs are decreasing the size and rate of capital deployments in order to lengthen the life of their existing fund.

As a result of the difficult VC fundraising environment, founders are raising smaller rounds at lower valuations, therefore giving up more equity. This environment requires founders to be more resourceful and focus on building sustainable business models.

Despite the macro environment, Web3 VC activity. is almost double the prior crypto bear market and pre-seed deals are picking up. In fact, 20% of all crypto VC deals completed in Q1 2023 went to the earliest stage companies.

With many exiting crypto entirely during the bear market, savvy investors may find gems in this challenging environment. Historically, Web3 unicorns have been born in the bear market (i.e. Chainalysis, Fireblocks, OpenSea, Uniswap).



Recent trends are strongly focused around challenges the Web3 space is facing, such as poor user experience, inability to recover accounts, centralized identity risks and inability for users to control their own data, complicated infrastructure, compliance concerns, and limited use cases for NFTs. Many early-stage startups are focused on building solutions to tackle these problems and generate value for the entire Web3 industry.

User Experience


Complicated UX has long plagued the Web3 industry. Increased attention on UI / UX is required for mass adoption of Web3 consumer and enterprise applications.

Account Abstraction


Building smart contract functionality into wallet accounts unlocks necessary features such as social recovery, fraud protection, and access control.

Decentralized Identifiers


DIDs allow for streamlined KYC, AML, investor verification, and proof of identity for users in jurisdictions where credentials are difficult to obtain.

No-Code/Low-Code Platforms


Infrastructure is maturing to the point where non-technical users are now able to easily integrate blockchain technology for their businesses.

Compliance & Policy


Compliance software solutions are on the rise as policymakers focus heavily on prohibiting illicit actors and ensuring companies are contributing to the security of Web3.

NFT Financialization


Increased utility for NFTs beyond profile pictures is expanding to DeFi via fractionalizing real-world and digital assets, as well as using NFTs as collateral for loans.

Sources: Bloomberg, CoinMarketCap, Galaxy Research, PitchBook Data


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