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The year 2022 was a disastrous period for crypto due to the bear market and other chaotic events. The crypto industry has yet to recover from the collapse of Terra in Q2 of 2022 to FTX’s implosion in Q4. The ripple effects of FTX’s bankruptcy across the industry affected many sectors, including top firms. Among the affected area is crypto venture capital funding. Blockdata analytics firm reported the state of blockchain and crypto venture capital funding in the fourth quarter (Q4) of 2022. According to the report, venture capital funding in the crypto and blockchain sectors dwindled. Related Reading: Bulls Have To Defend This Level To Prevent Cardano From Sliding Further Terra And FTX Implosions Among Chief Cause Of Decline In VC Funding Blockdata’s report noted a successive quarterly decline in funding throughout 2022 after a flourishing venture capital funding in the Web3 space in 2021. Blockdata analyzed data from CB Insights, a market intelligence platform that analyzes data points on venture capital, startups, and various sectors. In its analysis, Blockdata noted that Q4 recorded a 34% decline in venture capital funding from the third (Q3) of 2022. The last quarter saw a drastic drop in funding compared to Q1 and Q2.  According to Blockdata’s report, venture capital investment in crypto declined quarterly in 2022. Q1 recorded a 53% decline from the 2021 value, Q2 a 67% reduction, and Q4 experienced a 61% decline in funding. The drop in venture capital investment maintained a consecutive pattern, falling from its all-time high of $11 billion in funding and 692 deals in the first four months of 2022. In its report, Blockdata outlined several factors responsible for the reduced crypto and blockchain funding over the past year. First, it cited the $60 billion Terra ecosystem collapse in May 2022 as a trigger for the downturn. The Terra collapse sent a cascade effect across the industry, leading many crypto firms, including Celsius and Three Arrows Capital, to bankruptcy. The FTX implosion in November 2022 was also among the factors Blockdata cited that fueled reduced blockchain and crypto VC funding. In addition, the FTX liquidity crunch spiked volatility across the crypto market, causing many assets to lose value while some firms went bankrupt.  Related Reading: What’s Next As Uniswap Price Moves Closer To Key Support Line? Also, the global macroeconomic conditions in traditional finance and capital markets contributed to the decline in VC funding. For example, the spike in interest rates and the US Fed’s inflation-control strategy were among the factors that repelled venture capitalists from funding crypto and blockchain startups. Due to these factors, Q4 of 2022 recorded only $3.7 billion in funding, a 61% decline against the $9.6 billion in Q4 of 2021. The overall blockchain and crypto startup funding saw an 11% yearly decline, dropping from $32 billion in 2021 to $29 billion in 2022. A Ray Of Hope For The Crypto Sector However, Blockdata noted that the volume of investment deals in 2022 increased by 35% against the 2021 outcome. That is a positive result amid the massive decline in funding recorded. In addition, the firm noted that despite the downturn in venture capital investments, investors still want to invest in blockchain-based technology. The report noted that venture capitalists are shifting focus towards non-volatile innovations, including cross-chain bridges, payments, DAO, lending, remittance services, and more.  Despite a funding decline in Q4, Amber Group raised $300 million in a Series C fundraiser in December 2022. The fourth quarter also saw nine blockchain mega-rounds, where firms raised over $100 million in funding. However, Uniswap and Celestia were the only firms to attain unicorn status in Q4 of 2022. Featured Image From Pixabay stevepb, Chart From TradingView.com.