Encryption Venture Capital Market Trend Analysis: The Rise of Token Dominance and Liquidity Investment

The current financing environment is becoming increasingly severe, primarily due to the decline in upstream capital returns and the challenges faced by limited partners' capital. Throughout the venture capital industry, the funds returned to limited partners by funds at various stages have decreased compared to previous years, resulting in a reduction of available funds for existing and newly established venture capital for investment, further exacerbating the financing difficulties for founders.

This trend has significantly impacted crypto venture capital. In 2025, although the number of transactions has slowed down, the pace of capital deployment remains roughly the same as in 2024. The decrease in the number of transactions may be related to many venture capital funds approaching the end of their lifecycle and a reduction in available funds. However, some large funds are still making large transactions, keeping the overall capital deployment stable.

In the past two years, merger and acquisition activities in the encryption field have continued to improve, creating favorable conditions for liquidity and exit opportunities. Recent large-scale mergers and acquisitions, including NinjaTrader, Privy, Bridge, Deribit, and HiddenRoad, have provided more assurance for industry consolidation and encryption equity venture capital exits.

In terms of trading structure, although the overall number of transactions remains stable, more transactions are concentrated in the Pre-seed, Seed, and Accelerator stages, where capital is relatively abundant. In particular, Accelerators and Launch Platforms lead in the number of transactions, reflecting that, in a tightening financing environment, founders are more inclined to issue tokens early to launch projects.

The median scale of early funding rounds shows a recovery trend. The scale of Pre-seed round financing continues to grow year-on-year, indicating that funding in the earliest stages remains sufficient. The median financing for Seed, Series A, and Series B rounds has approached or returned to the levels of 2022.

Looking ahead, the crypto venture capital market may see three major trends:

1. Tokens will become the main investment mechanism, and the market will shift from a "token + equity" dual structure to a model of "single asset carrying value."

2. Financial technology venture capital and encryption venture capital are accelerating their integration. Traditional financial technology investors are gradually entering the encryption field, focusing on next-generation payment networks, new digital banks, and blockchain-based asset tokenization platforms.

3. The rise of "Liquid Venture". This new investment model seeks venture capital opportunities in the liquid token market, featuring higher liquidity, lower entry barriers, more flexible position management, and capital operations.

The encryption sector will continue to lead innovation in venture capital. With the integration of public and private capital markets, and more assets being put on-chain, an increasing number of companies may choose an "on-chain first" financing method. Although the return distribution in the crypto market is more extreme, it is this potential for asymmetric returns that will still attract a significant influx of capital into crypto venture capital.