Despite raising over $909 million in funding, May 2025 marked a sobering milestone for crypto venture capital: the lowest number of investment rounds completed in more than four years.
According to data from crypto analytics platform RootData, just 62 VC rounds closed last month, a sharp decline that highlights the growing caution in digital asset investing—even as deal values remain significant.
This downturn in volume reflects a complex web of challenges facing the crypto investment landscape: a fragile macroeconomic backdrop, shifting investor sentiment, market consolidation, and seasonal slowdowns.
Fewer Deals, Bigger Checks
On paper, May’s $909 million raised might seem encouraging. It was the second-highest fundraising month of 2025 by value, trailing only March, which saw nearly $2.9 billion raised across 78 rounds. But the number of deals paints a different picture.
This 62-deal figure matches lows not seen since January 2021, when the last prolonged period of VC hesitance took hold during early COVID-era volatility.
So what’s going on?
Market Malaise and Macroeconomic Headwinds
Experts say the pullback stems from a combination of crypto-specific and broader economic pressures. Aurelie Barthere, principal research analyst at Nansen, noted that crypto market sentiment peaked in late January and only modestly recovered in April—before deteriorating again in late May due to rising global tariff tensions.
“Market prices and sentiment have been range-bound,” Barthere explained. “That, paired with geopolitical noise, has cooled appetite for early-stage crypto plays.”
Adding to the pressure, persistent high interest rates and a jittery bond market are weighing on all risk assets, including digital assets and the startups building around them.
Consolidation Takes the Stage
While fresh capital for early-stage crypto ventures may be slowing, merger and acquisition (M&A) activity is heating up—a hallmark of maturing or cooling markets.
Coinbase’s landmark $2.9 billion acquisition of Deribit, a major crypto derivatives exchange, was announced in early May and is now the largest crypto M&A on record, according to RootData and Blockworks.
“We’re seeing more consolidation plays than new funding bets,” said Patrick Heusser, head of lending at crypto finance firm Sentora. “That typically emerges when investors are unsure of the next growth phase or when prices have been flat for too long.”
Heusser added that, aside from Bitcoin—which remains a rare bright spot—most crypto assets have underperformed this year, further dampening investor enthusiasm.
Away From VC: Strategic Partnerships on the Rise
Interestingly, while venture rounds are slowing, direct strategic deals between large companies and crypto protocols are gaining momentum, according to Nansen’s Barthere.
“These aren’t your typical VC-led seed or Series A rounds,” she said. “They’re negotiated partnerships, revenue-sharing models, and product integrations that don’t always show up in VC deal trackers but represent meaningful activity.”
The growing desire for regulatory clarity is also pushing bigger players to pursue safer, bilateral deals instead of joining high-risk early rounds. “More defined frameworks reduce friction in corporate partnerships,” Barthere added.
Seasonal Dip—or Structural Shift?
Some in the industry suggest the slump may be partly seasonal. Marcin Kazmierczak, co-founder and COO of blockchain oracle firm RedStone, sees historical patterns at play.
“May and June tend to be slower months,” he said. “Investors go into ‘wait-and-see’ mode before returning in Q4, which is when some of the best deals typically get done.”
Still, with interest rates high and political tensions rising, Kazmierczak acknowledged that structural forces may continue to suppress VC risk appetite in the short term.
The Big Picture: A More Selective Market Emerges
The takeaway? While venture deal volume is down, capital is still flowing—to fewer, more mature, and more strategically positioned players. Startups hoping to secure VC backing in the current climate will need more than just a whitepaper and hype—they’ll need product traction, regulatory readiness, and a path to revenue.
Meanwhile, the growing dominance of M&As and strategic partnerships suggests the crypto market is entering a new, more pragmatic phase. Less froth. More fundamentals.
And while the frenzy of bull-market investing may be behind us—for now—the builders, buyers, and bold ideas are still very much in play.
