Crypto venture funding declined 59% quarter-over-quarter to $1.976 billion in the second quarter across 378 deals.
According to a Galaxy report, last quarter was the second-smallest investment quarter since the fourth quarter of 2020.
Later-stage deals captured 52% of total capital invested, representing only the second time since the first quarter of 2021 that mature companies received more funding than early-stage startups.
The dramatic quarterly drop appears less severe when accounting for unusual activity registered in the first quarter, which included MGX’s $2 billion investment in Binance.
Excluding that sovereign-connected fund deal, the second quarter funding decreased 29% from the previous quarter.
Galaxy Digital’s report showed crypto venture activity remains depressed compared to prior bull markets despite Bitcoin’s strong price performance throughout 2025.
For the first time in years, mining companies received the largest share of crypto VC investment, capturing more than 20% of total capital deployed.
The $500 million sector allocation was driven primarily by Sequoia’s $300 million investment in cloud-mining operator XY Miners, reflecting increased demand for compute resources stemming from artificial intelligence sector growth.
Geographic and stage distribution
US-based companies maintained dominance in the crypto startup ecosystem, receiving 47.8% of capital invested and 41.2% of completed deals. The UK ranked second with 22.9% of capital allocation, followed by Japan at 4.3% and Singapore at 3.6%.
This geographic concentration persists despite historically challenging regulatory conditions in the US.
The shift toward later-stage funding reflects growing market maturity as venture-backed firms achieve product-market fit and established traditional players adopt crypto technologies.
Pre-seed deal percentages have declined consistently as the industry evolves beyond its experimental phase. Companies founded in 2018 accounted for the most capital raised, while 2024-founded companies led deal count metrics.
Market headwinds and competition
Crypto venture fund fundraising remains challenging, with $1.7 billion allocated across 21 funds last quarter.
Macroeconomic factors, including higher interest rates, continue discouraging allocator commitments to venture investments broadly.
Competition from spot Bitcoin exchange-traded funds and digital asset treasury companies provides alternative exposure mechanisms for institutional investors seeking crypto market participation.
Furthermore, the report highlighted that the historical correlation between Bitcoin prices and venture activity has weakened over the past two years.
While Bitcoin has risen substantially since January 2023, venture capital deployment has failed to match previous cycle patterns.
Diminished interest in formerly popular sectors, including gaming, NFTs, and Web3 applications, contributes to reduced allocator enthusiasm for crypto venture strategies.
The report projected potential improvements in US crypto startup activity following the new administration’s pro-crypto policy initiatives.
Regulatory clarity around stablecoins and market structure legislation could enable traditional financial services firms to enter the crypto sector, potentially increasing venture funding demand across the ecosystem.
