March saw a significant resurgence in venture capital (VC) interest in the cryptocurrency sector, with a 52.5% increase in funding compared to the previous month.

According to RootData, crypto projects secured $1.16 billion in funding, focusing mainly on infrastructure and decentralized finance (DeFi) projects. This marks the highest level of monthly funding since April 2022, indicating a strong recovery in the sector.

Investment Distribution and Highlights Out of 180 publicly announced investments, one-fifth of the deals were in the range of $1 million to $3 million, while just over 15% managed to raise between $5 million to $10 million. The majority of these projects were based in the United States, yet they constituted less than 10% of the total deal count.

Notably, Ethereum layer-2 blockchain Optimism secured the month's largest funding round, raising $89 million through the sale of its tokens in a private deal. Cryptography startup Zama followed closely with a $73 million Series A round.

VC Firms Show Renewed Interest Recent activities by VC firms have underscored their growing interest in the crypto space. Andreessen Horowitz (a16z) announced a $30 million fund dedicated to Web3 gaming at the beginning of April.

Additionally, a16z co-founder Marc Andreessen and Galaxy Digital played significant roles in the $75 million fund raised by VC firm 1kx, targeting crypto-based consumer apps. This renewed enthusiasm is a positive sign for the sector, especially in light of the challenges faced in 2022 following the collapse of FTX.

Funding Breakdown Infrastructure projects received the lion's share of funding in March, totaling nearly $283 million, which is about a quarter of the overall VC funding for the month. DeFi projects were not far behind, with $228.1 million in funding, making up nearly 20% of the total.

Centralized finance (CeFi) projects, such as exchanges, received the third-most funding at $85.5 million. Interestingly, no funding was reported in the DAO category for the month.

"Last month's funding is the first time since November that VC funding has broken over $1 billion for the month."

Looking Ahead This resurgence in VC funding comes after a somewhat dampened 2023 for crypto raises, largely due to the fallout from FTX's collapse. However, with monthly gains observed year-to-date and a growing enthusiasm for crypto in tandem with the markets, the future looks promising for crypto projects.

PitchBook attributes this renewed interest partly to the launch of spot Bitcoin (BTC) exchange-traded funds (ETFs) in the U.S., signaling a potential for continued growth in the sector.