tl;dr
Crypto venture funding in Q2 declined by 59% quarter-over-quarter to $1.976 billion across 378 deals, marking the second-lowest investment quarter since late 2020. Later-stage deals accounted for 52% of capital, indicating a market shift toward mature companies. Adjusted for a large Q1 investment, t...
Crypto venture funding experienced a sharp 59% decline quarter-over-quarter, settling at $1.976 billion across 378 deals in Q2. This marked the second-smallest investment quarter since late 2020. Notably, later-stage deals absorbed 52% of total capital, making it only the second occasion since Q1 2021 that mature companies attracted more funding than early-stage startups. Adjusting for an extraordinary $2 billion MGX investment in Binance during Q1, the Q2 drop reflects a 29% decrease rather than a severe plunge.
Despite Bitcoin’s robust price performance throughout 2025, crypto venture activity remains subdued compared to previous bull markets. Mining companies took center stage for the first time in years, securing over 20% of invested capital, largely driven by Sequoia’s $300 million infusion into cloud-mining operator XY Miners. This surge correlates with heightened demand for compute power linked to artificial intelligence sector expansion.
US-based companies dominated the crypto startup landscape, capturing 47.8% of invested capital and 41.2% of deals, followed by the UK with 22.9%, Japan at 4.3%, and Singapore at 3.6%. This geographic concentration persists despite tough regulatory environments in the US. The shift toward later-stage funding signals a maturing market where established firms have achieved product-market fit and traditional players increasingly adopt crypto technologies. Meanwhile, pre-seed deals are steadily declining as the industry moves beyond its nascent stage. Companies founded in 2018 raised the most capital, whereas 2024-founded firms led in deal volume.
Fundraising for crypto venture funds remains difficult, with just $1.7 billion allocated across 21 funds in Q2. Broader macroeconomic headwinds such as rising interest rates dampen institutional appetite for venture commitments. Alternative investment vehicles like spot Bitcoin ETFs and digital asset treasury management offer other entry points for institutional investors, weakening the historical linkage between Bitcoin prices and venture activity. Meanwhile, fading enthusiasm for sectors like gaming, NFTs, and Web3 diminishes overall crypto venture momentum.
Looking ahead, the report anticipates that US crypto startup activity may revive with new pro-crypto policy measures under the current administration. Greater regulatory clarity on stablecoins and market structure could pave the way for traditional financial firms to enter the crypto domain, potentially boosting venture capital demand throughout the ecosystem.