Before the Breakout: How Capital Repriced Crypto for 2026 — From Winter to Infrastructure

TLDR

2025 wasn’t a “bull-market reset”—it was a quality-driven recapitalization. Funding surged to $30B+ YTD by Q4(with ~$13B in Q3) after the 2024 trough (~$9B), but deal count didn’t expand meaningfully, implying larger, more selective checks and a fat-tail headline. Investors crowded into compliance-ready rails—payments/stablecoins/RWA, infrastructure, regulated trading, and info markets—while consumer narratives stayed lighter. Geography is turning multipolar, with clearer licensing hubs pulling weight outside the U.S. What matters next: where the new “default” institutional stack is forming—and who controls distribution in 2026.

Total Capital Invested and Deal Count

Crypto venture funding hit a cyclical low in 2023 and then rebounded strongly in 2024–2025.

In 2023, venture investors deployed roughly $12B into crypto startups – a -72% drop from 2022’s total as the frothy valuations of 2021–2022 gave way to bear-market caution. About 1,500+ deals were closed in 2023. In 2024, the market entered a clear trough. Total crypto VC investment fell to $9B in 2024 (-28% YoY decrease from 2023), and deal count fell slightly to ~952 deals for the year. Funding accelerated particularly in H2 2024 – for example, Q4 2024 saw $3.2B across 261 deals, a 46% jump in capital from Q3 despite a 13% drop in deal count as investors focused on larger bets.

2025 has been marked by a huge resurgence in capital deployment. By Q4 2025, year-to-date funding exceeded $30B, already surpassing 2024’s total by $21B. Quarterly investment hit multi-year highs – e.g. Q3 2025 alone saw ~$13B raised (the biggest quarter since Q1 2022). This was partly driven by a small number of mega-deals, which skewed aggregate averages but did not alter the underlying upward trend. Even so, the underlying trend is positive: excluding outliers, Q1–Q3 2025 funding was still roughly double the same period in 2024. In contrast, deal counts in 2025 have not grown commensurately – in fact, some data suggests deal volumes may have stagnated or declined relative to 2024. For instance, there are ~800+ startup VC deals in 2025 YTD, down ~13%. The average deal size jumped as a result. In short, 2025’s increase in capital was driven by bigger checks rather than more startups funded.

Quarterly momentum: This momentum accelerated into H1 2025: Q1 2025 reached ~$4.8B (highest since Q3 2022), and although Q2 dipped to ~$2.0B (after the Binance boost in Q1), Q3 2025 rebounded ~+47% QoQ to $13B. In other words, by mid-2025 the quarterly run-rate of crypto venture investment was back on par with early-2022 levels.

Mega-deals & skew on averages:

Mega-deals meaningfully distorted headline fundraising figures in 2025, creating a pronounced divergence between mean and median deal sizes. Binance’s $2B round in Q1 — the largest VC transaction in crypto history — accounted for ~34% of the quarter’s $5.8B total.

Late 2025 showed a similar pattern. Polymarket’s $2B raise and Kalshi’s $1B round (at an $11B valuation) will meaningfully inflate Q4 totals. The year also featured $300M for XY Miners, multiple $200M+ rounds across privacy, security, and infrastructure, and numerous $50M–$150M raises spanning L1s, L2s, and fintech. Additional outliers — including Ripple’s $500M strategic round and Bullish’s $1.11B IPO — contributed to a pronounced fat-tail distribution.

These mega-deals lifted average deal size, increased late-stage share, and widened the gap between mean and median. While highlighted for completeness, analysis of medians and ex-mega-deal trends is essential to reveal the underlying market: most deals remain small, even as a handful of ultra-large financings dominate aggregate capital.

Big-picture: Relative to the last cycle’s peak (2021–early 2022), current funding levels remain moderate. At the 2021 peak, crypto startups raised over $36B in a year (2021), fueled by a frenzy of seed deals and lofty valuations. 2022 saw over $44B (front-loaded before the market crash). In contrast, 2023’s ~$12B and 2024’s ~$9B indicate a reset to more sustainable levels.

The 2025 revival – on track to $30B+ – signals that the crypto venture market is climbing out of the winter, but with a very different character: more late-stage focus, more due diligence, and an emphasis on quality over quantity of deals. As we detail below, investors in 2025 gravitated toward certain sectors and stages, backing fewer but stronger projects, and positioning for what many expect to be a next growth cycle in 2026 and beyond.

Deal Size Distribution

The deal size distribution in 2023–2025 reflects a clear shift toward larger rounds. In 2024, deals under $10M accounted for over 75% of all activity, with the $5–10M bracket alone contributing ~76%. By contrast, in 2025 the < $10M share fell to ~61%, while most growth occurred in the $10–50M and $50M+ segments, producing a more pronounced barbell structure: early-stage activity concentrated in sub-$5M rounds, a thinner $1–5M middle, and a notable rise in large tickets at the upper end.

Several dynamics drove this shift:

• Stage correlation: Late-stage rounds accounted for ~45% of total capital (or deal count, specify, while early-stage rounds (Seed–Series A) remained mostly under $10M. By Q3 2025, ~10% of all deals exceeded $50M (vs. ~8% in 2024), signaling the return of large-check deployment.

• Category correlation: Mega-rounds clustered around CeFi and infrastructure — exchanges, brokers, and core blockchain systems frequently raised $100M+. Meanwhile, Entertainment and gaming/NFT projects remained in the lower brackets, typically sub-$5M.

• Investor correlation: Sub-$1M micro-rounds came primarily from angels and niche crypto funds, with fewer accelerator-led deals in 2025. Mega-rounds, in contrast, were led by large TradFi institutions and corporate VCs.

Overall, the market has bifurcated: most deals remain under $10M, but a small set of $50M+ and $100M+ rounds captures a disproportionate share of total capital, shaping the aggregate statistics despite representing a minority of transactions.

This comparison underscores the growing polarization in deal sizes – 2025 had relatively fewer mid-sized rounds and proportionally more very large rounds than prior years. For venture investors and startup founders, this means the fundraising market has become “go big or stay small”: substantial capital is available for top-performing later-stage projects, while early-stage teams face more competition for smaller checks.

Fundraising by Stage (Pre-Seed, Seed, Early-Stage, Late Stage, Undisclosed)

Crypto funding stages shifted sharply from 2023 to 2025. In the 2022–23 downturn, late-stage rounds nearly vanished, leaving 2023 dominated by Pre-Seed, Seed, and occasional Series A deals. By mid-2025, the landscape reversed: Series B+ rounds captured the majority of total capital, while early-stage activity remained the core driver of deal count. As confidence returned, undisclosed-stage raises declined.

Pre-Seed

Pre-Seed deal share stayed surprisingly high in 2023–2024, even rising slightly in 2024—evidence of steady founder activity despite market stress. These rounds were very small in dollar terms, contributing only a few percent of total capital, often involving DAO grants or accelerator-style raises. Crypto-native funds continued backing pre-seed teams for low-cost optionality, keeping this pipeline consistently active.

Seed

Seed activity remained steady across 2023–2025 but with smaller checks than the 2021 cycle. Roughly 65% of 2023–2024 deals were under $5M, reflecting Seed/Seed+ norms. Median seed size gradually improved (~$2.5M → ~$3M), showing modest appetite recovery even as seed’s share of total capital fell with the return of larger rounds. In 2025, seed raises became somewhat easier but required stronger traction or technical proof, replacing the idea-stage momentum of 2021.

Early-stage (Strategic - Series A)

Early-stage was constrained in 2023, as few 2021–22 projects were healthy enough to raise full rounds. Conditions improved in 2024, with median early-stage rising ~26% to ~$4.8M and most rounds falling in the $10–50M range. By 2025, early-stage accelerated as bear-market builders matured. Many early-stage rounds—especially in infrastructure and DeFi—moved into the $10–50M range. Early-stage still dominated deal volume (>24% of all deals), but its share of total capital dropped to ~48%, overtaken by late-stage deployment.

Late Stage (Series B+)

Late-stage funding nearly vanished in 2022–2023, when post-unicorn failures pushed growth investors to the sidelines. Late-stage accounted for only ~10–15% of 2023 capital. Momentum returned in 2024: by Q4, Series B+ represented ~40% of quarterly capital. The full rebound arrived in 2025—over half of H1 2025 capital flowed into late-stage, though highly concentrated: a dozen to two dozen deals formed most of this 52% share. Early-stage remained high in volume, but late-stage rounds dominated dollars.

Undisclosed / Unknown Stage

In 2023, many companies avoided stage labels to mask down-rounds or bridge financings, creating a large “Undisclosed” category. As sentiment improved in 2024–2025, founders returned to standard labeling, reducing opacity. Strategic rounds—especially from exchanges—still appeared but were classified as late-stage due to size. Overall, 2025 featured far fewer undisclosed rounds, reflecting a healthier and more transparent market.

Stage Skew & Rationales

The stage rotation from 2023 to 2025 reflected clear market dynamics. In 2023, investors avoided late-stage risk, concentrating on early-stage rounds where valuations were low and bridge extensions could be raised discreetly. Late-stage funding fell to ~10–15% of total capital, and Series A/B compressed into small “extension” rounds.

As sentiment improved in 2024–2025, growth rounds reopened. By Q2 2025, 52% of capital flowed into later-stage deals, supported by regulatory clarity and stronger business fundamentals. Average late-stage check sizes remained stable ($6.4M → $6.3M from 2023 to 2024), while early-stage averages rose to $4.8M, signaling renewed confidence—before 2025’s mega-rounds pushed overall averages sharply higher.

Crucially, early-stage didn’t weaken. Crypto-native funds maintained pre-seed and seed activity through 2023–2024 and shifted to a barbell strategy in 2025: active pre-seed pipelines paired with concentrated late-stage deployment. Series A/B, thin in 2023, expanded again in 2025 as maturing bear-market builders returned to market.

In essence: 2023 = early-stage survival, 2024 = first late-stage rebound, 2025 = full late-stage comeback, with 2026 likely more balanced if macro conditions allow.

Fundraising by Categories (Main-Categories) & Sector (Sub-Categories)

4.1.Main Categories:

Over the past three years, investor sector preferences have rotated significantly, mirroring the changing narratives in crypto. In the 2021 bull, hot areas were DeFi protocols, NFTs/Gaming, and Web3 consumer apps, while by 2023–24 many of those fell out of favor, replaced by focus on core infrastructure, financial plumbing (stablecoins, custody), and new themes like real-world assets (RWA) or AI+crypto. The data shows clear shifts in which main categories (broad sectors) attracted the most capital in 2023 vs 2024 vs 2025:

CeFi

CeFi hit its post-FTX low point in 2023: most raises were distressed, sector share collapsed, and CeFi fell from 2021’s top-funded vertical to the bottom. A mild recovery began in 2024, led by regulated exchanges in Asia/Middle East and improving U.S. sentiment after the late-2024 pro-crypto Congress. In 2025, CeFi re-entered the market with a few headline rounds, most notably Binance’s $2B raise, which significantly inflated H1 totals. Excluding this outlier, CeFi remained smaller than DeFi but clearly rebounding, with capital concentrating in compliance-aligned, institutional exchanges. Examples include EDX’s $85M raise (2023)during a weak market. Overall, CeFi bottomed in 2023 and began a gradual, regulation-driven recovery through 2024–2025.

DeFi

After the 2020–21 boom, DeFi cooled in 2022–23 as token prices fell, but remained a core category. 2023 funding centered on infrastructure-like DeFi (DEX aggregators, liquidity providers, risk tools) while speculative tokens faded. Narratives shifted in 2024 toward real yield and TradFi integration, pushing DeFi/financial infrastructure to the top-funded category in several market reports. Momentum accelerated in 2025: DeFi-related startups led all categories with $6.2B in H1, driven by stablecoin issuers, institutional DeFi, and financial infrastructure. Round sizes increased as institutional demand for compliance, revenue-generating protocols grew (derivatives, KYC pools). DeFi dominated deal count in 2023–24 with small rounds; larger checks only returned in 2025—partly on the back of major stablecoin deals. Funds like Pantera, Dragonfly, and Multicoin remain bullish heading into 2026.

Infrastructure

Infrastructure was a top-funded category across 2023–2025. With application hype fading in 2023, capital rotated into L1s, L2 scaling, interoperability, dev tooling. Strength carried into 2024, where infra/Web3 saw +33.5% QoQ in Q4 2024, reaching $592M (16% of capital) across 53 deals, ranking #2 by capital and deal count. H1 2025 accelerated further: L1/L2 ecosystems raised ~$3.3B, making infrastructure the second-largest category after DeFi. Mining returned as a sub-sector: a $300M mining deal in Q2 2025 made “Mining” the top category that quarter, amplified by AI-driven compute demand. Themes evolved each year — 2023: scalability/zk-rollups; 2024: modular/app-chains; 2025: identity, compliance, real-world integrations. Infrastructure consistently captured large round sizes, high valuations, and remained foundational heading into 2026.

Payments & Stablecoins

Payments and stablecoins became a standout category from 2023–2025 as real-world utility took center stage. After the 2022 fallout, stablecoins proved the most scalable use case: by Q4 2024, stablecoin businesses captured 17.5% of total funding, boosted by Tether’s major raise. Capital then expanded toward asset-backed stablecoins, payment rails, cross-border infra (e.g., Circle’s Elements acquisition, Ripple’s ecosystem investments). In H1 2025, stablecoin/payment networks pulled in ~$1.5B, reflecting rising adoption and yield-driven demand. VCs backed wallets with embedded payments, merchant integration, compliant processors, and emerging-market issuers.

AI x Crypto

AI–crypto convergence emerged as a real narrative from 2023–2025. Early rounds in 2023 were small (Fetch.ai, SingularityNET, a handful of seed-stage entrants). By 2024, AI+blockchain gained traction but remained minor. Small checks went to ChainGPT, AI marketplaces, and decentralized compute. The category broke out in early 2025 with ~$0.7B raised, its first meaningful capital cycle. Notable deals included Gensyn’s $43M (decentralized compute) and multiple AI-driven trading/security platforms. While retail chased 2024’s meme-AI tokens, VC capital focused on compute, automation, agentic systems, and early infrastructure for decentralized AI. By 2025, AI+crypto grew from near-zero (2022) to a credible niche (~$700M), positioned for stronger expansion in 2026.

RWA (Real-World Assets) & Tokenization

RWA tokenization became a top cross-sector narrative by 2024–2025. 2023 activity was early: Maple Finance pivoted to RWA lending; several pilot programs emerged. Momentum grew in 2024, with projects raising to tokenize bonds, treasuries, ETFs (Ondo’s $10M, Matrixdock, Backed Finance). By 2025, RWA became a core venture theme and a major driver within DeFi/financial infra. Much of H1 2025’s $6.2B DeFi/Infra funding came from RWA-aligned startups: stablecoin issuers, tokenized funds, compliant lending pools, and yield products backed by real collateral. Though datasets rarely separate RWA as a standalone category, it became one of the fastest-growing, institution-ready verticals entering 2026.

Middleware & Others

Middleware (developer APIs, indexers, compliance tools) remained smaller but steady from 2023–2025. Security/compliance startups attracted ~$1.2B in H1 2025, driven by enterprise demand and regulatory requirements. Developer infra (compute/storage: Filecoin ecosystem, Akash, etc.) saw moderate traction. Social/Web3 Social had isolated wins (Farcaster’s $30M, friend.tech clones) but lacked broad PMF, keeping deal share limited.

Entertainment (Web3 Social, NFTs, Gaming)

Once leading categories in 2021, NFTs/gaming collapsed in 2023 as hype evaporated. Throughout 2023–24, most VCs avoided the sector; reports noted gaming/metaverse/NFTs “failed to capture significant attention.” However, Q4 2024 showed a misleading spike: Web3/NFT/Gaming became #1 by deal count (22%) and reached ~$771M (21% of capital) almost entirely due to Praxis’s $525M mega-round. In H1 2025, the sector returned to baseline with ~$0.6B (~5% of total)—mostly early-stage. Many teams pursued token raises instead of equity, further reducing VC visibility. By 2025, interest ticked up slightly (better-quality games, stronger NFT infra), but mainstream VCs remained cautious. High deal count, low capital share: a classic “prove-it” phase.

Category trends show a clear rotation across cycles:

• 2023: Infrastructure and middleware dominated the sparse funding landscape as investors avoided consumer apps.

• 2024: Stablecoins and financial infrastructure surged, Infrastructure and Web3 held secondary positions, while entertainment sectors remained quiet.

• 2025: “Serious” verticals—DeFi (particularly RWA/stablecoin) and Infrastructure (L1/L2)—captured nearly 75% of all H1 2025 funding, while Entertainment (NFTs/Gaming) slid to 65% Late-stage, with $1.2B in 2025, underscoring how analytics, oracles, and risk engines now underpin payments, credit, and RWA issuance.

• Together, Payments + Stablecoins + Data grew from ~$0.7B (2023) to ~$5.2B (2025)—clear evidence that the market is now funding value-transfer + information-transfer rails, not just trading venues.

Prediction Markets & InfoFi

• A breakout story of 2025. Prediction markets raised ~$2.68B across 2023–25—all of it in 2025. About 75% of volume was Early-stage, with the rest Late/Undisclosed, reflecting one or two ultra-mega rounds (>$500M) into regulated Kalshi-style exchanges plus a long tail of early InfoFi (markets for signals, labels, research).

• Prediction markets evolved from niche betting to information infrastructure underpinning pricing for macro, credit, and governance risk—hence renewed VC conviction.

Layer-1, Mining, Computing & Infrastructure

• Layer-1 chains raised ~$2.71B (2023–25): $0.65B (2023) → $0.75B (2024) → ~$1.3B (2025). Nearly 48% of L1 capital was Early-stage; ~25% was Late/Undisclosed. Investors still back new execution environments but expect faster ecosystem delivery.

• Mining/compute infra raised ~$2.38B: $1.1B (2023) → ~0 (2024) → ~$1.28B (2025). About 74% of mining capital was Late-stage, reflecting industrial-scale BTC mining, energy, and sovereign/infrastructure investors.

• Pure “Computing/DePIN GPU networks” remained small (~$50M), mostly Seed/Early, indicating an emerging but not yet scaled storyline.

AI, Gaming, Wallets & Consumer UX

• AI was the most active sub-category by deal count: 30+ deals (2023) → 40+ (2024) → ~70 (2025), totaling ~$2.0B. Stage mix: 20% Seed, 33% Early, 25% Late, 20% Undisclosed—a full pipeline from agentic infra to later-stage platforms.

• Gaming raised ~$1.54B (2023–25), declining from $0.74B (2023) to $0.42B (2024) and $0.38B (2025)—mostly Seed/Early with high Undisclosed share. Wallets raised ~$0.94B, front-loaded in 2023 with dips in 2024 and modest rebound in 2025. Identity tooling brought ~$0.45B, spread across stages.

• Consumer UX no longer drives the cycle; instead, identity, key management, and AI copilots are quietly gaining traction. Privacy funding remained steady (e.g., Aztec’s $100M plus multiple early ZK infra raises). Combined custody/security/compliance reached $1.2B by 2025, reflecting surging institutional demand for compliance rails.

4.3. Conclusion

The sub-category view reinforces the core shape of the 2025 cycle: capital concentrated heavily in regulated exchanges, asset managers, payments and stablecoin rails, prediction markets, and heavy infrastructure (L1, mining, data). These sectors absorbed most late-stage and mega-deal volume, while AI, identity, and InfoFi remained early- and mid-stage bets on a more automated, data-driven financial stack. Consumer categories—gaming, NFTs, SocialFi—persisted but no longer defined the cap table.

The market has clearly bifurcated. High-conviction, revenue-anchored verticals—stablecoins/RWA, L1/L2 infra, exchange infra, compliance/security—pulled the largest checks, while speculative narratives from the 2021 cycle attracted only selective funding. Capital has shifted from hype to functional, regulated, and institution-ready infrastructure.

As 2026 approaches, the test is whether these newly funded rails—payments, stablecoins, RWA platforms, prediction markets, compliant CEX/CeDeFi venues—convert into sustained transaction volume and fee revenue. Investors increasingly expect deeper real-world integration, continued scaling of core infra, and more mature AI convergence, with certain ecosystems (e.g., Solana) well-positioned to benefit. The narrative has moved decisively toward utilitarian, foundational crypto infrastructure.

Investor Behavior and Top Investors (2023–2025)

Investor Behavior (2023–2025): Who Is Actually Deploying Capital?

Market Structure: Fewer Funds, More Concentrated Investment

Between 2021 and 2024, the number of active US venture firms fell by more than 25% (from ~8,300 to ~6,200), as limited partners concentrated commitments into a handful of large franchises. Financial Times, Crypto VC followed the same pattern: overall funding volumes recovered from the 2022–2023 trough, but with capital increasingly concentrated in a small core of repeat crypto-native and crossover investors.

Inside that tighter market, the top investors in Q3 2025, capturing ~32% of all 2025 YTD transactions. Coinbase Ventures led with ~60 deals in 9 months of 2025, cementing its position as the most active fund. Meanwhile, the 2021-era “tourist investors” have vanished — 2025 belongs to specialized, multi-cycle crypto VCs with real conviction.

Who Is Most Active in 2025?

This table highlights three key facts relevant for 2025:

1. Coinbase Ventures, Big Brain Holdings, and Yzi Labs (Binance Labs) are extremely active in volume, particularly at early stage.

2. Pantera, Polychain, Paradigm, Dragonfly, Multicoin, Framework form the “heavyweight” belt: multi-fund platforms with a long track record and high lead ratio, able to write larger checks at Series A+ and growth.

Putting dataset and public rankings together, 2025’s most active investor cohort is effectively:

• Early-stage ecosystem amplifiers: Coinbase Ventures, Big Brain Holdings, 1kx, YZi Labs, plus chain-ecosystem funds (Solana Ventures, Polygon, etc.).

• Full-stack crypto VCs: a16z crypto, Paradigm, Polychain, Pantera, Dragonfly, Multicoin, Framework, Gate Ventures.

• Strategic corporate/TradFi entrants: bank-backed or corporate vehicles (Standard Chartered/JV, payment companies, fintechs) selectively joining later-stage or strategically important deals.

Stage Behavior: From Early-Stage Dominance to a Barbell Market

By 2025, the pattern reversed. Funding reached $4.59B across 414 deals, with late-stage capturing ~56% of capital and early-stage ~44%. Q2 2025 alone recorded 31 rounds over $50M, while sub-$1M checks declined—signaling bigger tickets and a more selective, mature market.

The Stage Shift

2023–2024:

• Seed/A dominated

• Many tiny rounds (