Crypto VC Funding Drops 59% to $1.97 Billion in Q2 2025

VC funding for crypto startups plunged in the second quarter of 2025, marking one of the weakest periods since late 2020.

Key Takeaways:

• Crypto VC funding fell 59% QoQ to $1.97B across 378 deals, one of the weakest quarters since 2020.
• Mining led with over $500M raised, while later-stage firms captured 52% of total capital.
• The US regained dominance with nearly half of funds raised, as new fund launches stayed near five-year lows.

According to data accumulated by Galaxy Digital, VC investment totaled $1.97 billion across 378 deals, down 59% quarter-on-quarter and 15% lower in deal count.

The sharp decline follows an inflated Q1, when $4.8 billion poured into the sector, nearly half of which came from a single $2 billion injection by UAE sovereign-linked fund MGX into Binance. Excluding that outlier, Q2’s falloff would have been closer to 29%.

The standout category was mining, which attracted over $500 million, including a $300 million raise by cloud-mining operator XY Miners in a deal led by Sequoia.

Privacy, security, and blockchain infrastructure followed, with each segment seeing investments above $200 million. The surge in mining allocations is tied to growing demand for compute power fueled by the rise of artificial intelligence.

By stage, later-round companies captured 52% of capital, reflecting a shift toward more mature firms with proven business models.

For the first time in years, mining topped all categories.

Over $500M was raised — led by a $300M round for XY Miners — as AI-driven compute demand draws VC interest back to mining. pic.twitter.com/3gIdGrBJCQ

Pre-seed activity remained steady, but its share has gradually declined from prior cycles, pointing to a maturing startup landscape.

Geographically, the United States dominated both capital and deal count, taking 47.8% of funds and 41.2% of completed deals.

The U.K. ranked second with nearly 23%, followed by Japan and Singapore. The U.S. regained the lead after Malta briefly overtook it last quarter due to MGX’s Binance deal.

On the fundraising side, 21 new crypto-focused funds closed in Q2, raising a combined $1.76 billion.

Average and median fund sizes edged higher this year, but the overall environment for managers remains difficult, with new fund count hovering near five-year lows.

The broader macro backdrop continues to weigh on crypto venture. Rising interest rates, a shift in allocator preferences, and competition from other vehicles such as spot ETFs and digital asset treasury companies (DATCOs) have diverted institutional flows away from early-stage startups.

Many allocators are now seeking exposure through liquid, regulated instruments rather than venture bets.

As reported, Pure Crypto, a relatively quiet player in the digital asset space based outside Chicago, has turned heads after revealing its flagship fund has surged nearly 1,000% since its inception in 2018.

What began as a crypto experiment within a traditional wealth management firm is now a $60 million fund, backed by a sharp strategy and family office capital.

Founded by Jeremy Boynton, who also runs Laureate Wealth Management, and managed alongside partner Zachary Lindquist, Pure Crypto has grown into a $100 million crypto-focused fund of funds.

The duo is now preparing to raise capital for their fourth fund, which they say will ride what they see as the final wave of venture-style returns in crypto.

“We think this is maybe the last hurrah in the venture capital-esque nature of crypto returns,” Boynton said.

As regulation solidifies, such as the recent stablecoin bill signed into law by former President Donald Trump, and major corporations explore integrating digital currencies, they see the wild west days of outsized gains coming to a close.

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