In Q2 2025, poured $1.97 billion into crypto and blockchain startups across 378 deals, marking a 59% drop from the prior quarter's levels. This decline highlights a broader trend where investors exercise greater caution amid maturation. Analysts point to weakened correlations between bitcoin prices and VC activity as a key factor.
The Shift Away from Narrative Chasing
Crypto investors have moved beyond jumping on every emerging story in the space. They now demand evidence of actual adoption and transaction volumes before committing funds.
According to Sylvia To, director at bullish Capital Management, venture capitalists evaluate infrastructure projects more rigorously, questioning if enough users and activity justify the raises. She notes that past cycles allowed bets on new chains as potential disruptors, but that approach no longer holds.
This caution stems from market fragmentation, with numerous layer-1 projects failing to deliver sustainable value. now favors initiatives with clear revenue paths and institutional ties.
CeFi's Growing Influence in funding Trends
Centralized finance, or CeFi, has seen open borrows climb to $17.78 billion by mid-2025, up 15% from the previous quarter. This growth reflects demand for stable lending amid volatile markets.
Eva Oberholzer, chief investment officer at Ajna Capital, emphasizes that predictable revenue models and irreversible adoption drive current investments. CeFi platforms benefit from this focus, attracting capital for their reliable structures.
Venture activity in CeFi intersects with real-world assets and stablecoins, which drew significant interest in 2025 fundraising. Projects in these areas raised funds at valuations tied to business metrics rather than speculation.
market Maturation and Selective Deals
Overall crypto fundraising surged in some metrics, reaching over $10 billion in Q2 when including late-stage financing like mergers and IPOs. However, pure startup VC remained subdued, with later-stage deals capturing half the capital.
Galaxy Research reports that mining led sectors with over $500 million invested, fueled by AI compute needs. Infrastructure and privacy also secured substantial sums, showing a pivot to foundational tech.
Investors avoid overvalued projects lacking product-market fit. As the U.S. reclaimed dominance with nearly half of global deals, regulatory shifts encouraged more measured deployments.
Challenges for Early-Stage Projects
Pre- deals held steady, but their share of total activity declined as the industry matures. Founders must now demonstrate traction early to secure funding.
According to reports from CryptoRank, the market favors niche blockchain solutions over general ones, reducing risks from unproven narratives. This trend pushes teams toward flexible fundraising beyond traditional rounds.
Competition from ETFs and treasury companies diverts capital from ventures, adding pressure on startups to prove viability. CeFi's role in providing liquidity helps bridge this gap.
Outlook for Crypto funding in Evolving Markets
With fundraising on pace to exceed 2024 totals despite slowdowns, selective investing could foster healthier growth. Sectors like AI and DeFi continue to attract attention for their potential stability.
This cautious approach in crypto funding, especially within CeFi and broader markets, promotes sustainable development. It ensures resources go to projects that deliver real value, benefiting the ecosystem long-term.
