Total funding increased by 36% while the number of transactions plummeted by 60%. What happened to the crypto VC market in 2025?

In 2025, an interesting paradox emerged in the crypto venture capital market: total funding reached a new high, but the number of deals plummeted significantly. This reflects a broader industry shift from “broad outreach” to “precision investing,” as well as a profound adjustment in capital allocation logic.

Total Funding Growth, Deal Volume Plummets

According to the latest reports, the total crypto VC funding in 2025 reached $18.9 billion, a 36% increase from $13.8 billion in 2024. However, the number of deals dropped by 60% to approximately 1,200. This data starkly illustrates the point: more money is flowing, but the number of projects being invested in has sharply decreased.

Capital Concentrates in Later-Stage Projects

The phenomenon of “decreasing volume, increasing price” is primarily driven by capital focusing on later-stage projects. Notably, digital asset vault companies (DAT) raised about $29 billion in 2025, with this massive influx of funds directly attracting significant institutional capital. Meanwhile, early-stage funding slowed markedly.

Personal opinion: This trend reflects a decline in institutional risk appetite, with investors preferring to back projects with established scale and cash flow rather than gambling on early-stage innovations.

Why Early-Stage Funding Is Slowing

According to the latest reports, the main reasons for the slowdown in early-stage funding include:

• Reduced VC funds — a large portion of capital is locked in later-stage projects and DAT
• Institutional investors favor AI projects — divergence exists in the intersection of crypto and AI, with some investors considering hype ahead of practical application
• Clearer regulations accelerate the expansion of mature companies — established crypto firms are gaining more funding opportunities, squeezing out new projects

These factors combined have made it significantly more difficult for startups to secure early-stage funding.

2026: Mild Recovery but Higher Barriers

Entering 2026, many investors expect a modest recovery in early-stage funding, but this recovery will have new characteristics:

New Attitudes of Investors

• Focus more on fundamentals than narratives — no longer paying for stories, but looking at actual progress
• Clearer US regulations seen as a key catalyst — friendly policies will boost investor confidence
• Continued market discipline — capital allocation becomes more rational

Investment Hotspots in 2026

According to the latest news, institutional capital will focus on the following areas:

• Stablecoins and Payments — ongoing demand for payment infrastructure
• Institutional-grade Infrastructure — tools and platforms to meet large institutional needs
• Prediction Markets — a sector that gained popularity in 2025
• RWA Tokenization — increasing demand for on-chain real-world assets
• DeFi — improving traditional DeFi infrastructure

Return of Token Sales

It’s worth noting that token sales re-emerged in 2025 but did not replace traditional VC. It is expected that 2026 will see a hybrid financing model — combining traditional VC funding with token sales, allowing projects to choose based on their circumstances.

Summary

The core change in the 2025 crypto VC market is a shift from pursuing deal volume to focusing on funding quality. Behind the growth in total funding is capital concentrating in later-stage projects and leading institutions, making early-stage fundraising more challenging.

Looking into 2026, this trend will continue, but with clearer regulations and restored market confidence, early-stage funding is expected to see a mild rebound. The key points are: if you are a founder, you need to demonstrate more solid fundamentals; if you are an investor, you need to balance rational selection with innovative exploration.