- Crypto venture deal count dropped to around 50 in May, the lowest level since before the 2021 bull market.
- Investors are increasingly concentrating capital into fewer, larger bets.
- AI continues to attract funding that might have previously gone into crypto startups.
- Kalshi’s recent $1 billion raise highlights the shift toward category leaders.
- Builders face less competition for attention despite tougher fundraising conditions.
Crypto venture activity hits multi-year low
Crypto venture capital activity continued to cool in May, with the number of completed deals falling to roughly 50, a level not seen since the industry was significantly smaller before the 2021 cycle.
According to The Block's Data & Insights team, the decline has been broad-based across nearly every sector. Infrastructure projects and crypto financial services firms, historically among the most active categories for venture investment, both recorded activity near multi-year lows.
Capital is becoming more concentrated
While the number of deals has fallen sharply, total funding levels remain relatively resilient. Rather than spreading capital across dozens of startups, investors are increasingly directing larger sums toward a small group of companies viewed as category leaders.
A recent example is prediction market platform Kalshi, which secured a massive $1 billion funding round. The deal illustrates how venture capital is becoming concentrated in fewer opportunities that investors believe have the potential to dominate their sectors.
AI competition impacts crypto fundraising
Part of the slowdown can be attributed to the continued rise of artificial intelligence. Many investors have shifted both capital and attention toward AI-focused startups, reducing the pool of funding available for crypto ventures.
At the same time, the crypto industry has produced fewer compelling early-stage opportunities compared to previous market cycles, making investors more selective when evaluating new projects.
Less noise creates opportunities for builders
Despite the tougher fundraising environment, the decline in venture activity may benefit startups with strong products and clear market demand.
With fewer projects competing for investor attention, founders who can demonstrate real traction may find it easier to stand out than during previous bull market periods.
Whether venture activity rebounds later in 2026 will likely depend on the emergence of new sectors capable of generating excitement beyond current hotspots such as prediction markets and financial infrastructure.
