Welcome to the Morning Newsletter of US Crypto News—where we provide the most important information about cryptocurrency for today.
Let's sip a cup of coffee to explore the Venture Capital (VC) field, and possibly understand where smart investors think the next boom will be. A new wave of funding is pouring into cryptocurrency startups despite market volatility. Investors are placing big bets on the long-term development of blockchain, with interest spanning from AI-based DeFi to encoded assets.
Cryptocurrency News of the Day: Cryptocurrency Venture Capital Drops to a 5-Year Low
The latest data from Galaxy Research shows that venture capital in cryptocurrency has just experienced the slowest quarter in five years, with less than $2 billion flowing into this field in the second quarter of 2025. This marks a significant decrease compared to the beginning of the year, although partly due to a statistical anomaly.
The total for the first quarter was inflated by a massive $2 billion investment in the Binance exchange. Even after adjusting for that, the slowdown remains, with data showing investors are being more cautious.
So why is there this caution? Several factors are at play.
- The global economy is still unstable
- Competition from the booming AI field is extremely fierce, and
- Some large organizations are choosing simpler cryptocurrency investments, such as Bitcoin and Ethereum spot ETFs (exchange-traded funds), instead of making long-term bets on startups.
Interestingly, the largest portion of investment has been directed towards established companies, not early-stage startups.
The cryptocurrency mining sector surprisingly became the focal point, attracting over half a billion dollars. The largest portion came from a $300 million funding round for cloud mining operator XY Miners, supported by Sequoia.
Analysts at Galaxy Research note the increasingly growing demand for computing power, especially from AI, is bringing a new wave of interest to mining.
Meanwhile, the US has regained its leading position in funding and transaction volume, followed by the UK, Japan, and Singapore. Startups established in 2024 secured the most deals, while experienced companies from 2018 attracted the largest funding rounds.
This suggests that amid the characteristic cautious cryptocurrency market, experience remains crucial.
Bitcoin Price Surge No Longer Driving Cryptocurrency Venture Capital
Not just startups, but venture capital funds are also facing challenges, experiencing a quarter full of difficulties. Although funds raised for new cryptocurrency-focused funds have slightly increased, the number of new funds remains low for many years.
Newly launched funds are typically larger, indicating that while fewer players are raising money, those who succeed are convincing investors to commit more strongly.
Higher interest rates, memories of the 2022–2023 downturn, and changing investor priorities continue to impact fundraising.
AI is attracting attention and money, while newly launched digital asset treasury products provide organizations with cryptocurrency exposure with interest without waiting for startup risks.
History shows that cryptocurrency venture capital typically follows Bitcoin prices. When BTC boomed in 2017 and 2021, investment also boomed.
However, that connection has weakened.
Although Bitcoin prices have strongly increased since early 2023, venture capital activity has not kept pace, suggesting market momentum is changing.
Nevertheless, pro-cryptocurrency signals from Washington, including stablecoin regulations and market reforms, could encourage more Traditional Finance (TradFi) players to participate.
If macroeconomic conditions stabilize and regulatory clarity improves, the current slowdown could create a premise for a new growth wave.
