Crypto Funding Struggles to Reclaim Last Cycle’s Highs

Despite the crypto-friendly moves from the Trump administration, crypto venture capital funds (VC) appear hesitant to invest in the industry.

According to DeFiLlama, February 2025 accounted for just $1 billion in VC raises, down 85% from the metric’s all-time high of $7 billion in October 2021. The $1 billion figure is only 70% more than was raised in December 2022, weeks after the FTX collapse when sentiment surrounding the industry was at its lowest.

While VC funding in 2025 remains well below the levels seen in 2021-2022, there was a noticeable jump in December, and more than $1 billion has been raised every month since the U.S. presidential election.

Crypto VC funding bottomed in August 2023 with just $275 million raised in that month, the lowest since October 2020 when BTC was trading at $13,000.

While there is no clear catalyst for the lack of demand, market sentiment surrounding the altcoin space, which most VC raises contribute to, has struggled to pick up throughout the 2024-2025 cycle. The mindset shift is catalyzed by the altcoin market’s poor relative performance and Bitcoin’s (BTC) rising dominance.

BTC dominance (BTC.D) has hardly flinched throughout the recent bull market, and is currently at 62%, its highest level since March 2021. The metric bottomed out at 39% in September 2022.

Traditional Startups Also Struggle

The metrics look damning for crypto VC firms and potentially the altcoin market, but VCs in traditional startups are struggling as well.

Data from AngelList shows tracked VC firms that invested between 2021 and 2023 are significantly underperforming investments with 2017-2020 vintages.

2017-2020 vintage investments averaged a positive return by the 17 month mark on their total value to paid-in capital (TVPI), however the 2021-2023 classes have been flat or negative in median value. By the three-year mark, the 2017-2020 class averaged a 50% or greater return, while 2021’s 36-month mark remains unchanged.