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Author: Alex Thorn, Head of Research at Galaxy Digital; Translation: @bitchainvisionxz
In the third quarter of 2025, venture capital activity in the cryptocurrency space remained sluggish compared to previous bull market levels.While there was growth from the prior quarter, this was primarily driven by a handful of late-stage deals.Valuations have risen to bull market levels and early-stage investment activity remains active.The macro environment continues to pose headwinds for fund managers seeking new capital allocations, and recent crypto market activity in the fourth quarter is likely to further hinder capital allocations in the fourth quarter of this year and the first quarter of 2026.Competition from investment vehicles such as ETFs and digital asset treasury companies has also added to the headwinds.
Although still below 2021-2022 bull market levels, venture capital activity overall remains active and healthy.Areas such as stablecoins, artificial intelligence, blockchain infrastructure and trading continue to attract deals and funding, and pre-seed investment activity also remains stable.Given the new administration’s commitment to promoting the adoption of Bitcoin, cryptocurrency and blockchain technology, the United States’ long-standing dominance in the field is likely to be further strengthened.
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2025In the third quarter of 2020, total venture capital investment in cryptocurrency startups was45.9billion U.S. dollars (down month-on-month59%), the transaction quantity is414Pens (decreased month-on-month15%).
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Later-stage deals as a share of total investment56%, the proportion of early-stage transactions44%.
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Transaction items are based on21With a financing amount of US$100 million, it has become the most popular area for venture capital, among whichRevolutFinancing10billion U.S. dollars,KrakenFinancing5billion dollars.
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The United States once again dominates in terms of financing size and number of deals.
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In terms of fund raising, investors are seeking13Only new crypto VC funds allocated31.6billion dollars.
1, venture capital overview
(1) Number of investments and investment amount
In the third quarter, venture capital institutions invested a total of US$4.65 billion in start-ups and private companies in the cryptocurrency and blockchain fields (an increase of 290% from the previous quarter), and the number of investments was 415 (an increase of 9% from the previous quarter).
In the third quarter, a total of seven investments accounted for half of the total venture capital investment in the cryptocurrency and blockchain field: Revolut ($1 billion), Kraken ($500 million), Erebor ($250 million), Treasury ($146 million), Fnality ($135 million), Mesh Connect ($130 million) and ZeroHash ($104 million).
Judging from annual data, although the number of investments has not exceeded previous years, the total investment volume in the first three quarters of 2025 has exceeded the same period in 2023 and 2024.
(2) Investment amount and Bitcoin price
In past cycles, money poured into crypto startups has been highly synchronized with the price of Bitcoin.But that’s not the case this cycle.Bitcoin prices have surged since January 2023, while venture capital activity has failed to keep pace.Weak interest from allocators in crypto venture capital and the venture capital space as a whole, coupled with competition from public market vehicles such as ETFs and treasury companies, continues to divert capital that might otherwise go to startups.
In the third quarter of 2025, 57% of funds were invested in mature-stage companies, and 43% of funds flowed into growth-stage companies.
In terms of the number of transactions, the proportion of pre-seed round transactions remained stable month-on-month and remained healthy compared to previous cycles.We measure entrepreneurial activity by tracking the proportion of pre-seed deals.The share of late-stage deals has continued to rise over the past few quarters, reflecting the overall maturity of the market.
(3) Valuation and transaction size
Valuations of venture-backed crypto companies continue to rise in 2025, surpassing 2021 highs in the first quarter and approaching that level in the third quarter.The valuation of the overall venture capital market has also increased in 2025, but has not yet reached the peak in 2021.The median deal size in the crypto space also hit an all-time high in the third quarter of 2025, with the median single deal amount in the period being $4.5 million and the median pre-financing valuation reaching $36 million.
(4) Investment Category Analysis
In our classification system, trading/exchange/investment/lending companies have raised the highest amount of funds from crypto venture capital institutions, regaining the top spot with a capital scale of over US$2 billion, of which Revolut received US$1 billion and Kraken received US$500 million.Such businesses have the most mature business models in the crypto space and have historically accounted for the highest proportion of venture capital allocations.
In the long term, the market share of each track’s financing amount shows some interesting trends beyond the continued dominance of the “trading/exchange/investment/lending” category.For example, the Web3/NFT/DAO/Metaverse/Games category has seen its share decline since its PFP-era heyday, while the payments/rewards and banking categories are on the rise.
Judging from the number of transactions, the Web3/NFT/DAO/Metaverse/Game category can still attract investment interest, but it is mainly concentrated in earlier stages than in the past (and therefore the amount of funds invested is also smaller).Other categories to watch include infrastructure (encompassing companies offering staking and blockchain access services), artificial intelligence, DeFi, payments/rewards (highly focused given the rise of stablecoins), and asset tokenization (changes in regulatory attitudes have given its prospects a spotlight).
Judging by the number of deals, investments in this space are becoming more diversified over time.
(5) Investment stage and category analysis
The investment amount and number of transactions divided by category and stage can more clearly show what stage of development companies in each category are financing.In the third quarter of 2025, the vast majority of funds invested in the “trading/exchange/investment/lending” category flowed to mature companies (mainly Revolut and Kraken).In contrast, financing entities in banking and other categories are mainly growth-stage enterprises.
By analyzing the distribution of investment capital at different stages within each category, the relative maturity of various investment opportunities can be revealed.
As in previous quarters, Q3 2025 showed healthy dispersion in terms of deal stage across the major investment categories.
By analyzing the proportion of transactions at different stages in each category, we can gain insight into the development cycle of each investable category.
(6) Investment geographical distribution
In the third quarter of 2025, 47% of investment funds went to companies headquartered in the United States.The UK ranks second with 28%, followed by Singapore (3.8%) and the Netherlands (3.3%).
Judging from the number of transactions, the situation is generally similar but the distribution is slightly scattered.US-based companies completed 40% of total deal volume, followed by Singapore (7.3%), the UK (6.8%) and Hong Kong (3.6%).
Judging from the year of founding, companies established in 2018 raised the majority of funds, while companies established in 2024 received the largest number of investments.
2, Venture fund fundraising status
Although total funds raised increased sequentially, the fundraising environment for crypto venture funds remains challenging.The macro environment and the turmoil in the crypto market in 2022-2023 continue to make some allocators reluctant to maintain their level of commitment to crypto ventures in early 2021 and into 2022.Recently, the increased attention in the field of artificial intelligence has also diverted some attention from crypto assets, while spot ETFs and treasury companies are also competing for institutional funds.In the third quarter of 2025, venture funds focusing on the encryption field raised a total of US$3.16 billion, involving 16 funds.
Judging from annual data, the total amount of funds raised by venture capital funds in the first three quarters of 2025 has exceeded that of the whole of 2024, and is expected to exceed the level of 2023.
In 2025, the average size of venture capital funds has risen to $163 million, but the median size has dropped to $36 million.
3, summary
Market sentiment is improving and investment activity is increasing, but both remain well below all-time highs.During previous bull cycles in 2017 and 2021, venture capital activity was highly correlated with liquid crypto asset prices, but over the past two years investment activity has remained subdued despite rising cryptocurrency prices.This stagnation in venture capital is caused by a variety of factors, such as the weakening appeal of previously popular crypto venture areas (such as games, NFTs, and Web3); competition for investment funds from artificial intelligence startups; and higher interest rates generally reducing the enthusiasm of venture capital allocators.
In 2025, mature companies will take the lead in terms of financing scale.Over the past three quarters, capital invested in established companies has exceeded that of startups, reflecting the growing maturity of the sector.As the entire industry matures, the proportion of pre-seed deals continues to decline.As crypto is adopted by established traditional institutions and a plethora of VC-backed companies achieve market fit, the golden age of pre-seed venture capital in crypto is likely behind us.
Spot ETPs (exchange-traded products) and digital asset treasury companies (DATCOs) may be weighing on funds and startups.Several high-profile investments by allocators in the U.S. spot Bitcoin ETP space indicate that some large investors (pension funds, endowments, hedge funds, etc.) may be gaining industry exposure through these large-scale, highly liquid vehicles, rather than turning to early-stage venture capital.Interest in spot Ethereum ETPs has increased over the past two quarters.If this trend continues, or ETP covers other alternative first-tier blockchains, demand for areas such as DeFi or Web3 may flow to ETP rather than the venture capital ecosystem.The rise of digital asset treasury companies (DATCOs) in 2025 may also compete with venture capital in terms of allocator interest in the space.
Fund managers still face tough environment.Although funds allocated in 2025 rose slightly, the number of new funds fell for two consecutive quarters and remained near a nearly five-year low.Macro trends continue to pose headwinds for allocators, but material shifts in the regulatory environment could signal a resurgence of allocator interest in the space.
The United States continues to dominate the crypto startup ecosystem.Despite a complex and often hostile regulatory environment in previous years, U.S.-based companies and projects have historically completed the majority of deals and received the most investment.This trend has continued this year as the new administration and Congress begin to pursue the most pro-crypto agenda in history.We expect that the dominance of the United States will increase, especially now that the GENIUS Act has taken effect. If Congress can pass the Crypto Market Structure Act, it will further attract traditional American financial services companies to substantially enter the field.
