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Crypto startup venture funding drops 59% in Q2 2025
Venture financing of crypto startups fell sharply in the second quarter of 2025, marking one of the weakest periods since late 2020.
According to data collected by Galaxy Digital, total venture investments amounted to $1.97 billion across 378 deals, down 59% from the previous quarter and 15% lower in deal count.
The most attractive category for investors was mining, which drew more than $500 million, including $300 million raised by cloud mining operator XY Miners in a Sequoia-led round.
The sharp rise in mining investments is linked to growing demand for computing power driven by the development of artificial intelligence. Next came privacy, security, and blockchain infrastructure, each attracting over $200 million.
Geographically, the United States regained its leadership in both capital volume and deal count, accounting for 47.8% of funds and 41.2% of completed deals.
The United Kingdom ranked second with nearly 23%, followed by Japan and Singapore.
Macroeconomics pressuring investors
The sharp drop in funding followed a surge in Q1, when the sector received $4.8 billion—nearly half of which came from a one-time $2 billion injection by MGX, a UAE sovereign fund–linked vehicle, into Binance. Without that deal, the decline in Q2 would have been about 29%.
Currently, the broader macroeconomic environment continues to pressure crypto venture funds. Rising interest rates, shifting allocator preferences, and competition from other instruments such as exchange-traded funds (ETFs) and digital asset management firms (DATCO) have driven institutional capital away from early-stage startups.
Pre-seed activity remained stable, but its share gradually declined compared to previous cycles, indicating a maturing startup market.Average and median fund sizes grew slightly this year, but the overall environment for managers remains challenging, with the number of new funds hovering near five-year lows.
Many allocators now seek exposure through liquid, regulated instruments rather than traditional venture capital.
As we wrote, Crypto VC funding up 87% in 2025 despite weak May
This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.
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