Hype VC bubble bursts as crypto projects in 2025 plummet disastrously

Venture capital funds have poured billions of USD into early-stage tokens during the “risk-on” rally of 2025. However, many of these bets are now trading significantly below the notable valuation levels seen in private funding rounds.

The widening gap between private fundraising figures and market capitalization on the public market indicates a market “reset,” following the cooling of the optimistic (narrative) based on the story.

Recent data shared by CryptoRank shows that dozens of heavily backed projects have lost hundreds of millions of USD in value, with some cases nearly “vanishing” entirely when the tokens officially list on exchanges. This raises new questions about valuation discipline during hot growth cycles.

The Market Reality Confronts VC Valuations

Comparing VC valuations with current market caps, as shown by CryptoRank, paints a fairly clear picture. Humanity Protocol, once valued at $1 billion in private rounds, now stands at around $285 million. Plasma (XPL) and ICNT have smaller gaps: Plasma approximately $224 million versus a $500 million valuation, and ICNT around $247 million compared to $470 million.

Source: CryptoRank The most significant drops cannot be ignored. Fuel Network, Double Zero, and Bubblemaps — projects that once drew attention by mocking American rapper Soulja Boy for his past crypto and NFT promotions — all had valuations close to or exceeding $1 billion, but now trade around $11 million, $373,000, and $6 million, respectively.

Camp Network and TreeHouse follow similar trajectories, dropping from valuations of $400 million to about $15 million and $16 million. Privasea also stands out, falling from $180 million to just around $1 million.

However, not all projects suffered heavy losses. SosoValue maintained a relatively stable market cap around $152 million compared to an initial valuation of $200 million, while Yieldbasis trades near $34 million versus $50 million during fundraising. Momentum and Bitlight are in the middle group, with market caps of approximately $43 million and $34 million, after funding rounds valuing them at $100 million and $170 million.

Capital Flows Recover, but Caution Replaces Euphoria

This valuation correction occurred even as crypto venture investment activity picked up again in 2025. According to CryptoRank, total quarterly investments increased to about $10 billion in Q2/2025 — the highest since early 2022 — and remained close to $8 billion in both Q3 and Q4.

Previously, during the bear market, capital flows declined steadily, hitting a low of around $689 million in Q3/2023, then stabilizing in the $1–2.5 billion range for most of 2024. The recovery in 2025 coincided with Bitcoin’s rally, with prices surpassing $126,000 mid-year before cooling off to the $80,000–$100,000 range by year-end.

The notable point is not just the scale of the recovery but also the timing. The largest capital disbursements occurred in Q2/2025, when market sentiment was most optimistic and token prices surged. According to CryptoRank data, many projects are now trading well below the VC-funded valuation levels from that period.

For many investors, the takeaway message is not that venture capital has “returned,” but that the public market is increasingly less willing to accept private round stories unconditionally. As some analysts on X have noted, the gap between VC valuations and actual trading data is becoming a risk signal rather than a symbol of confidence — emphasizing the need for more cautious expectations as capital continues to flow back into the crypto market.