Coinbase Ventures launched in 2018 on the heels of an unprecedented boom-bust cycle for bitcoin, which saw the currency’s price peak at nearly $20,000 before losing half its value in a little more than a month.
As a cryptocurrency trading platform, that short-lived frenzy was good for Coinbase’s business. But the decision to launch a crypto-focused VC firm had less to do with the price of bitcoin than what the market fervor meant for entrepreneurs.
Coinbase Ventures believed that it would benefit in the long run by investing in the ecosystem, Aggarwal said. Soon, the firm would become one of the industry’s most active investors, with deals backing game maker CryptoKitties, stablecoin startup Terra and crypto exchange Bitso.
Coinbase Ventures was part of a phenomenon that has repeated since the first bitcoin was mined a dozen years ago. Whenever the price of the world’s best-known digital currency has hit new highs, firms have stepped up their investments.
Blockchain startup deals gain momentum after bitcoin rallies
Long after the bitcoin buying frenzy subsided in early 2018, VC investors continued to pump money into cryptocurrency and blockchain startups. In 2018, such financing rounds totaled $2.8 billion across nearly 400 deals, the highest on record, according to PitchBook data.