Only $9 million have been invested in bitcoin companies during August 2015, compared with over $23 million in August 2014 and monthly $55-125 million during last spring. Does it reflect the disappointment of venture capitalists in bitcoin or just a seasonal factor?

In the beginning of 2014, the amount of investment in bitcoin companies was tremendous. More than $200 million was raised by cryptocurrency startups in just three months, with 21 Inc and Coinbase receiving record-breaking investments of $116 and $75 million respectively. In April and May, the monthly amount of investment in cryptocurrency companies was a little below $60 million, of which $50 million were raised by Circle and $28 million by Ripple Labs. Bitcoin journalists often compared these figures with much lower investments in Internet in 1990s, making long-reaching conclusions on the future of bitcoin.

However, the trend seems to have changed. The amount of investment in cryptocurrency ventures has been constantly decreasing for three months already, according to the Finance Magnates news site. It was above $30 million in June, slightly below $30 million in July and only $9 million in August, with only two deals. It is the lowest figure since April 2014. One can blame the seasonal factor, but a year ago, in August 2014, the investment in cryptocurrency companies reached $23 million.

This change might reflect a disappointment of investors in bitcoin, says Finance Magnates. They believe that such companies as Xapo, Circle, Blockchain and BitPay are unable to generate much revenue at present. They also point out that the investment in companies working with blockchain technology becomes more and more important compared with investment in startups built around bitcoin the currency.

However, it might be too early to give up. Big deals might be brewing at this very moment, preparing to be announced in autumn. Next few months will show if the present decline in venture investment is a long-term tendency.

Alexey Tereshchenko