After a prolonged slowdown, investment in crypto-focused startups rebounded sharply in the third quarter, reaching $4.65 billion. This marks one of the strongest bursts of venture capital activity since the downturn triggered by FTX’s collapse in late 2022. Investor confidence, which had fallen during that period, appears to be recovering as firms return to backing new crypto ventures at levels not seen in recent years.
In the third quarter of 2025, investment in crypto ventures surged 290% from the previous quarter, spread across 415 deals. The increase reflected both a significant rise in total funding and a slight uptick in the number of investments. Alex Thorn, head of research at Galaxy Digital, highlighted the strong quarter-on-quarter growth in a recent report. By comparison, the first quarter of 2025 saw $4.8 billion in funding, making Q3 one of the strongest periods for the sector.
This growth was accompanied by ongoing activity across a range of areas, including stablecoins, artificial intelligence, blockchain infrastructure, and trading platforms. Early-stage projects also continued to receive steady support, particularly at the initial funding stage. Overall, these patterns suggest that venture engagement in crypto remains solid, even if it has not returned to the frenzied levels seen during the 2021-2022 bull run.
Amid this surge, a small number of large deals accounted for a significant portion of the funding. Seven deals alone represented about half of the total capital. Among the largest rounds were $1 billion for Revolut, $500 million for Kraken, $250 million for Erebor, $146 million for Treasury, and $135 million for Fnality. Companies founded in 2018 received most of the total capital, while those launched in 2024 saw the highest number of deals.
The United States continued to lead the sector, both in terms of capital and deal volume. Here is how the global distribution breaks down:
Regarding the U.S.’s future leadership in crypto, Thorn noted, “We expect U.S. dominance to increase, particularly now that the GENIUS Act is law and especially if Congress can pass a crypto market structure bill, which would further entice traditional U.S. financial services firms to enter the space in earnest.”
Meanwhile, venture capital activity has not kept pace with rising crypto prices. Bitcoin, for instance, hit a record $126,000 in October, yet funding growth has lagged behind. Thorn noted that during previous bull cycles in 2017 and 2021, venture capital activity tended to move closely with token price gains — a connection that has weakened over the past two years.
Thorn pointed out that “the venture stagnation is due to a number of factors, such as waning interest in previously hot crypto VC sectors like gaming, NFTs, and Web3; competition from AI startups for investment capital; and higher interest rates, which disincentivize venture allocators broadly.”
On developments affecting venture capital, the report pointed out that spot exchange-traded products (ETPs) and digital asset treasury companies may be diverting capital away from early-stage crypto ventures. Large U.S. investors are increasingly seeking exposure through spot Bitcoin or Ethereum ETPs instead of funding startups directly. If this trend continues, Thorn noted that more investment could flow to ETPs, potentially limiting funding for areas like decentralized finance and Web3.
