The relative tepid flow of venture capital funding into the crypto industry this year, despite the recent crypto market resurgence, presents a downside risk, according to JPMorgan analysts.

"Our various proxies for crypto VC flows look rather subdued YTD [year to date] relative to previous years," JPMorgan analysts, led by Nikolaos Panigirtzoglou, wrote in a report on Thursday. "We had previously argued that a recovery in crypto VC flows is a necessary condition for a sustained recovery in crypto markets, so in our minds, the subdued VC flows YTD pose a downside risk."

Venture capital funding in the crypto sector has picked up momentum so far this year, yet it continues to lag behind previous years. The Block Pro's Deals Dashboard shows that the crypto industry has attracted $3.2 …