Crypto VC Outlook 2026: A Shift in the Winds! Funds Will Flow Into These Three "Certain" Tracks

Having experienced the baptism of the extreme cold and heat in 2025, the crypto venture capital market is standing at a critical crossroads. Although the total traditional VC investment rebounded to $18.9 billion, the number of deals plummeted by approximately 60% year-over-year, with capital highly concentrated in late-stage projects and DAT companies. Looking ahead to 2026, top investors generally expect the market to continue its rationality and discipline, with early-stage investments only experiencing a mild recovery, and token sales serving as a supplementary fundraising method. This article will delve into the deeper logic behind capital flows and reveal the certainty tracks and potential risks perceived by institutions for the coming year.

Review of 2025: “A Song of Ice and Fire” Under the Capital Winter

Reflecting on the just-passed 2025, the crypto venture capital market presents a contradictory yet clear picture: total volume is recovering, but the chill is palpable. According to data from The Block Pro, traditional risk investment total increased from $13.8 billion in 2024 to $18.9 billion in 2025. However, the number of deals associated with these investments sharply declined from over 2,900 to about 1,200, a drop of 60%. This means the average deal size has significantly expanded, and the vast majority of startups are shut out of capital. Mathijs van Esch, general partner at Maven 11, admits he did not expect capital to concentrate so extremely on a few companies, especially DAT companies.

The source of this “chill” is multifaceted. The primary factor is the reduction of “ammunition.” Rob Hadick, general partner at Dragonfly, points out that many crypto VC funds’ early fundraising rounds are nearly exhausted, and after the cooling of LP demand from its peak in 2021-2022, raising new funds has become extraordinarily difficult. Especially when many funds underperform Bitcoin and other risk assets, LPs have become more cautious. Anirudh Pai, partner at Robot Ventures, adds that this contraction of early risk is not limited to crypto; the “zero interest” attitude of institutional investors toward non-AI trading performance is also spreading here.

Meanwhile, a “hot” fire is burning fiercely in specific areas, mainly due to the rise of Digital Asset Treasury (DAT) companies. These firms provide institutions with a more straightforward exposure to crypto assets than direct investments in startups, attracting about $29 billion in 2025. This structural change, along with the maturation driven by clearer regulation and the scaling of established enterprises, has led to a “capital clustering” phenomenon. Arianna Simpson, general partner at a16z crypto, summarizes that fields overlapping with fintech, such as stablecoins, dominated fundraising, with business models returning to more traditional paths based on transaction fees and scale, while the AI boom has diverted some talent and attention.

2025 Key Data Comparison for Crypto VC Market

Traditional VC investment total: $18.9 billion (2025) vs $13.8 billion (2024)

Number of VC deals: about 1,200 (2025) vs >2,900 (2024)

Deal count YoY change: down approximately 60%

DAT fundraising: about $29 billion (through most of 2025)

Outlook for 2026: Mild Recovery and Continued Segmentation as Main Themes

For 2026, top-tier investment institutions generally agree that: early-stage funding environments will improve, but not return to the previous frenzy; rationality and discipline remain the foundation of the market. Quynh Ho, head of risk investment at GSR, predicts early activity will rebound, but the thresholds will “rise with the tide.” Investors’ focus has shifted from grand narratives to tangible business traction and fundamentals, and they are more willing to sacrifice some upside potential for clearer exit paths. Boris Revsin, general partner at Tribe Capital, also believes that deal volume and capital deployment will see a modest rebound, but far from the peaks of 2021-2022, with “discipline” being the defining characteristic.

Multiple factors may jointly drive this slow recovery. Rob Hadick notes that as the attention dispersal effect brought by DAT companies gradually diminishes, risk capital can refocus on operational entities. Clarification of regulations, increased M&A and IPO activities will also attract more entrepreneurs into the space. Additionally, expanding stablecoin applications and growing blockchain usage are expected to help more risk funds regain momentum in fundraising.

Among all variables, regulation is widely regarded as the most critical “swing factor.” Hoolie Tejwani, head of Coinbase Ventures, emphasizes that clear market structure rules in the US (expected to be introduced this year) will be the next major unlock for the startup ecosystem after the passage of the GENIUS Act. “Progress in regulatory clarity will have a huge impact on the startup ecosystem,” he states. Clear rules can not only reduce compliance uncertainty but also pave the way for traditional financial institutions to participate more deeply in the crypto market, indirectly creating opportunities for startups serving this demand.

However, the road to recovery is not smooth. Although Cosmo Jiang, general partner at Pantera Capital, does not provide a direct quantitative forecast, his emphasis on investing more time in the intersection of AI and blockchain hints that capital will still prioritize tracks with clear narratives and growth potential. Anirudh Pai from Robot Ventures is skeptical about the current hype around “crypto + AI,” believing that speculation has “dramatically” exceeded actual execution, and funding in this area next year may decrease. This starkly different outlook on the same sector reflects the ongoing segmentation of the market in 2026.

Betting on the Future: Five Core Tracks and Two Controversial Areas

When asked which directions are most promising, top VCs’ answers show both high consensus and notable divergence, clearly outlining the investment map for the coming year.

The most consensus is on stablecoins and payments. Arianna Simpson describes stablecoins as the “center of attention” at the 2025 “dance,” noting that their business models are shifting toward simpler revenue streams based on fees and transaction volume. The core drivers are increased institutional adoption and regulatory clarity, blurring the lines between stablecoins and fintech. Rob Hadick also observes that capital is “clustering” in stablecoins and related infrastructure.

Closely following is institutional-grade market infrastructure. This includes trading platforms, custody services, risk and compliance tools, and native crypto financial products that address operational issues. Investors generally believe these businesses will benefit directly from growing institutional demand. Quynh Ho from GSR specifically mentions their ongoing focus on market infrastructure around asset tokenization and the tools needed to support scaling, with real-world asset (RWA) tokenization remaining a long-term focus.

Prediction markets also garner considerable attention. Simpson believes that as usage grows, applications built on prediction platforms and auxiliary services have “incredible growth potential.” However, van Esch from Maven 11 remains cautious, expecting funding for prediction markets in 2026 to decrease, as actual usage and adoption growth may be slower than many anticipate.

Clear divergence exists mainly in the “AI and crypto integration” and “blockchain infrastructure” areas. On one side, Coinbase Ventures’ Tejwani and Pantera Capital’s Jiang are optimistic about the long-term potential of this intersection, with Tejwani even envisioning “agent commerce,” where machines use internet-native currencies (stablecoins) for payments. On the other side, Pai from Robot Ventures and Hadick from Dragonfly express strong skepticism. Pai states many projects are still “searching for solutions to problems,” and investors have lost patience; Hadick points out that evidence of any substantial progress in these intersecting fields is “almost zero.” Regarding new blockchain infrastructure, especially new Layer 1 networks and tools, GSR’s Ho and Tribe Capital’s Revsin believe that due to market overcrowding and unresolved value capture issues, only highly differentiated projects will attract capital.

The Revival of Token Sales: Structural Change or Cyclical Patch?

In 2025, fundraising through token sales or ICOs experienced a resurgence, but their role in VC’s view is quite nuanced. The consensus is that they have not, and are unlikely to, replace traditional risk investment.

Most VCs see token sales as a cyclical phenomenon, becoming increasingly selective. Boris Revsin from Tribe Capital believes that if public markets perform poorly, retail participation may increase, but the main risk remains speculative bubbles exceeding actual utility. Quynh Ho from GSR points out that well-designed token sales can serve as useful price discovery tools, but overall market sentiment remains crucial.

Views on future development vary along a spectrum. Anirudh Pai from Robot Ventures expects token-based financing to expand, especially for teams seeking to engage retail users and distribute tokens, but emphasizes top projects will continue to adopt a “hybrid” model combining token sales and VC funding. “The future is hybrid,” he states, “capital is just one part of building a company.” Coinbase Ventures’ Tejwani is more optimistic, describing on-chain fundraising as a structural shift. Citing Coinbase’s recent $375 million acquisition of Echo, he illustrates that capital formation is migrating onto the chain.

However, Rob Hadick issues a warning. He believes that headlines generated by token sales often outpace actual capital formation, and are more akin to airdrops than real fundraising. In his view, VC will still almost monopolize funding for the strongest companies and protocols. This divergence reveals the industry’s ongoing exploration of balancing decentralized financing efficiency with centralized professional guidance.

Insights for Entrepreneurs and Investors: Finding Certainty in Segmentation

Faced with a rational, segmented, and structurally changing 2026, both entrepreneurs and investors need to adjust their strategies to adapt to the new market paradigm.

For entrepreneurs, the top priority is understanding capital flows. Having a cool tech concept or vague Web3 narrative is no longer enough. Predictable business models, clear profit paths, regulatory compliance, and the ability to solve real-world (traditional finance or crypto-native) pain points will be core criteria for evaluation. Especially in consensus tracks like stablecoins/payments, institutional infrastructure, and RWA, competition will be fierce; differentiation and early traction are critical. Additionally, fundraising strategies should be carefully considered: whether to seek traditional VC backing and resources, directly target the community with well-designed token models, or adopt a hybrid approach—these decisions should be made thoughtfully based on project characteristics.

For investors (including institutions and accredited individuals), understanding the market’s layered structure is key. Opportunities can be categorized into several levels: 1) Core layer: Bitcoin, Ethereum, and major stablecoins, as foundational holdings; 2) Growth layer: leading projects or infrastructure with solid fundamentals that VC focuses on; 3) Opportunity layer: high-risk, high-volatility meme coins, emerging narratives (like AI + crypto), early-stage on-chain ICO activities. The investment discipline in 2026 means strictly controlling “opportunity layer” positions, focusing research and capital on the “growth layer,” and paying attention to the market beta generated by the “core layer.”

In summary, the 2026 crypto VC market will no longer be a feast of indiscriminate abundance but a endurance race testing sharp vision and extreme patience. Capital contraction forces the industry to shed superficiality and return to essentials—building sustainable, scalable businesses with genuine demand. This may be an inevitable pain point as the industry matures from adolescence, and after traversing this somewhat cold wilderness, the surviving entities will be stronger and more resilient.