By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.
This change is being driven in part by a drop in digital asset prices that has seen bitcoin lose nearly half of the record-high price it reached in October, and altcoins losing as much as 70% of their value over the past year, according to the report.
In addition, crypto-native funds are facing greater competition from traditional venture capital funds in areas like prediction markets and stablecoins as Wall Street becomes more involved in those areas, the report said.
For crypto startups, these trends mean investors are looking at more traditional startup qualities such as product-market fit, monetization and long-term user retention rather than narrative buzz, token liquidity and market share, per the report.
PYMNTS reported Friday (Feb. 6) that capital is leaving digital assets at a pace not seen since the depths of the last crypto winter, institutional allocations are shrinking as outflows grow and the speculative energy that once powered the crypto-native verticals of the blockchain space is beginning to run on fumes.
At the same time, the value proposition of stablecoins and other institutional blockchain instruments is rising inside traditional financial workflows.
It was reported in December that interest in prediction markets helped fuel an increase in FinTech venture funding in 2025, with Kalshi and Polymarket making up $3.71 billion of the $55.94 billion that FinTech companies raised from venture groups.
The $55.94 billion raised by FinTech companies was up 25% from the $44.75 billion the sector raised in 2024. Polymarket’s and Kalshi’s mega-rounds were events that have become increasingly rare in the FinTech space in recent years, particularly outside high-profile players like Stripe and Plaid.
In October, it was reported that AI was soaking up a record amount of venture capital dollars, with investors funneling nearly $193 billion into AI startups by that point in 2025.
That marked the first time since the dot-com bubble that more than half of global VC dollars went to a single sector.
By siphoning venture dollars away from other technology sectors, AI made it harder for other technology sectors to raise capital.
