Crypto Venture Funding fell to $1.976 billion per quarter, 59% in 378 transactions in the second quarter.
According to a report by Galaxy, the last quarter was the second-most smaar investment quarter since the fourth quarter of 2020.
Late trading represents that since the first quarter of 2021, mature companies have received more funds than early stage startups, investing 52% of total capital.
Considering the unusual activity registered in the first quarter, including MGX’s $2 billion investment in Binance, the dramatic quarter decline appears to be less severe.
Excluding fund transactions connected to that sovereign, funds for the second quarter fell 29% from the previous quarter.
A report from Galaxy Digital shows that despite Bitcoin’s strong price performance throughout 2025, Crypto Venture’s activities have been declining compared to previous bull markets.
For the first time in years, mining companies have acquired the largest share of Crypto VC investments, earning more than 20% of the total capital deployed.
The $500 million sector allocation is driven primarily by a $300 million investment in Sequoia’s cloud mining operator XY Minor, reflecting the growing demand for computational resources due to the growth of the artificial intelligence sector.
Geographical and graded distribution
The US-based company maintained control of the Crypto Startup Ecosystem, investing 47.8% of its capital and receiving 41.2% of its completed transactions. The UK ranked second with 22.9% of capital allocation, followed by Japan at 4.3% and Singapore at 3.6%.
This geographical concentration persists despite historically challenging regulatory conditions in the United States.
The later staged shift to funding reflects growth in market maturity as venture-backed companies achieve product market fit and adopt cryptographic technology with established traditional players.
As the industry evolves beyond the experimental stage, pre-seed trading rates have consistently declined. Founded in 2018, the companies accounted for the most capital collected, with companies designed in 2024 leading the transaction count metrics.
Market headwinds and competition
Crypto Venture Fund Fundraising remains difficult, with 21 funds allocated $1.7 billion in the last quarter.
Macroeconomic factors, including higher interest rates, continue to block allocators’ commitment to venture broadly into investments.
Competition between Spot Bitcoin Exchange Sales Fund and Digital Assets Treasury Finance finance companies provides alternative exposure mechanisms for institutional investors seeking to participate in the crypto market.
Furthermore, the report highlighted that the historical correlation between Bitcoin prices and venture activities has weakened over the past two years.
Bitcoin has risen significantly since January 2023, but venture capital developments did not match previous cycle patterns.
It has led to a decline in interest in previous popular sectors, such as gaming, NFT, and Web3 applications, and has contributed to a decline in allocator enthusiasm for crypto venture strategies.
The report predicted potential improvements to US crypto startup activities following the new administration’s pro-crypto policy initiative.
The clarity of regulations regarding stubcoin and market structure laws could lead traditional financial services companies to enter the crypto sector and increase venture financing demand across the ecosystem.
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