Crypto Venture Capital Cools Amid Heightened Caution in 2025
Venture capital investment in the crypto sector fell sharply in the second quarter of 2025, as investors exercised greater caution and shifted away from narrative-driven strategies. This marks one of the most significant slowdowns since the industry's last major correction.
Changing Investment Approaches
According to Sylvia To, director at Bullish Capital Management, venture capitalists are now applying a much more critical lens to potential investments. Speaking at Token2049 in Singapore, To explained that firms are no longer comfortable chasing the newest layer 1 blockchains or narratives. "VCs are a lot more careful now. Its not just a narrative play," To said. Previously, capital flowed rapidly into emerging chains and infrastructure projects, but investors are now scrutinizing the sustainability and viability of new entrants.
To noted that many projects are seeking funding at valuations that may not be justified by solid cash flow or revenue models. She commented on a growing hesitation among VCs to back projects based chiefly on future projections, given the market's current maturity and slow growth.
Industry-Wide Shift Confirmed
The cautious trend extends across the venture capital landscape. Eva Oberholzer, a chief investment officer in the sector, confirmed this shift. "It's more about predictable revenue models, institutional dependency, and irreversible adoption," she said in a recent statement, indicating a preference for more established business models over speculative plays.
Deal Volume and Value Decline
Data from Galaxy Research underscores the changing environment. In the second quarter of 2025, crypto venture capital funds closed 378 deals worth a combined $1.97 billion. That represents a 59% decrease in total funding and a 15% drop in deal count compared to the previous period. Over the first three quarters of the year, overall VC investment in crypto stood at $10.03 billion.
Despite the downturn, some asset managers, such as Strive Fundswhich was founded by American entrepreneur Vivek Ramaswamyhave continued to pursue "alpha-generating" strategies, particularly with Bitcoin-related products. However, these moves are exceptions in an otherwise cautious funding environment.
- VCs now emphasize revenue and adoption over hype.
- Total crypto VC deals and funding have continued their decline through 2025.
- Top firms selectively target established projects with proven business models.
As the crypto market matures, industry observers expect a continued focus on disciplined investing, predictable revenues, and sustainable business fundamentals through the upcoming year.
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