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Venture capital is the lifeblood of the Web 3 world and cryptocurrency startups. Entrepreneurs need to raise money for businesses to hire talented people, pay operating costs and market to expand the business.
Of course, the VCs are very happy about this, because they get a part of the long-term return – if there is any, of course. Most startups fail, and business relies heavily on unicorns to attract venture capital funds.
The cryptocurrency market is unique Of its kind, with cryptocurrencies also play a role that many startups launch tokens. However, the digital asset market did not do well.
Since October, when the price of each bitcoin reached a staggering record of $126,000, The orange asset is now on the red side by 25%.
Cryptocurrency prices are impacting the venture capital market, and the dynamic for startups to raise money is changing. What are the general forecasts now?
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“Market cycles can affect investment sentiment and can slow down or speed up the pace of closing deals,” said Stefan Diess, CEO of the Group. Hashgraphwhich focused on venture capital in the Hedera ecosystem.
Low expectations from venture capital
One of the first things that happens when cryptocurrencies are in a downward cycle is that startup valuations decline.
It may not seem directly related, but the concept of “hot rounds” for fashion startups is refreshing, and VCs do not favor sky-high valuations, he noted. Artem Gordadzean angel investor in the NEAR Foundation and an advisor in the startup accelerator Techstars.
“When Bitcoin trades at high levels, such as the expected $100,000 level, startup valuations are proportionally high,” Gordadze said. “This creates a difficult dynamic: the VC must justify the valuation of the entry based on a potential future price that must be achieved within the investment horizon to achieve acceptable returns.”
It seems that the theory that Bitcoin will always go up is not one that VC investors agree with. Due to the long horizons of venture capital investments, it has seen many cycles, especially with Bitcoin.
Also, many venture capital investors often describe the months of November and December as “writing”. This means that they do not expect to do much work during the fourth quarter and the holiday season, and prefer to start investing again after the calendar turns to another year.
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Pragmatic view
The view on venture capital from 10,000 feet, as it relates to the cryptocurrency sector specifically, is one of spending, but on a smaller scale.
For example: market Forecast Polymarket It closed on $1 billion, while Kraken took in $800 million in funding this quarter.
In the third quarter, total funding reached $4.59 billion, but half of that was concentrated in just seven deals, according to Alex Thorne, head of research at Galaxy.
“Market declines are centered in indicators because they stop seeing price action as a signal, but rather as execution flexibility and product as leading indicators,” said Hashgraph Group’s Diess. “Recessions push investors to focus more on fundamentals rather than short-term momentum.”
This short-term momentum can often be more hype than anything else. Many of the large venture capital-backed projects undertaken by TGE have not fared well this year. This includes PUMP (down more than 50% in 2025) and Perashin (down 91% since its launch in February).
“High volatility and uncertainty in initial valuations are driving a significant shift in capital allocation, favoring strategies with shorter liquidity cycles and better price control,” Gordadze added.
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Reservation and liquidity
One of the most unique aspects of the cryptocurrency industry is Token Generation Effectiveness (TGE).
As a successor to previous initial offerings, Coinbase is now facilitating the operations of TGE After purchasing For the Eco Investors platform With a value of $375 million.
Monad was the first project launched theregrossing $296 million, and there’s certainly more to come.
However, once the token is launched, there are some metrics unique to cryptocurrencies that aggressive investors should keep a close eye on.
One of them is the limitation, as in TGE, not all tokens are still in circulation in the market; There is a period of holding these assets. This aims to better motivate network participants, from team members to community airdrops and company efforts.
Then there is the fully diluted value, or FDV – which is the total number of tokens multiplied by the price – which is essentially the market value of all tokens, even if they have not been unlocked.
When the markets change, it becomes very difficult to predict every possible exit of the tokens for the investors at the helm, which can be a dilemma.
Recently, it started Arthur Hayes of Maelstrom Capital In a fit of rage on closed consonants, especially related to monads. As a trader, Hayes clearly does not like the illiquidity of these types of tokens.
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“Given that the average vesting/holding period in tokens or stocks ranges from 12 to 48 months, VC investors should consider the potential state of the market when these blocks end,” said Gordadze, Techstars mentor. “The entry price must be strategically set to ensure a profitable exit, making long-term market forecasting essential to completing the trade.
The future of venture capital investing in cryptocurrencies in 2026 and beyond
As for market forecasts, VCs certainly like to talk about the future. As for digital currencies, it seems that with favorable regulatory measures in the United States in 2025, the next year could be much better. Is it just the hope of investors?
maybe But rose-colored (or green) glasses are still the default for venture capital investors. Of course, optimism always wins.
“2026 is turning out to be a year defined by a real utility – DeFi will come back strong with increasing momentum and maturity, and the stablecoin moment is in full swing,” Deis noted. Certainly it was for stablecoins moment this year, however, as the boring infrastructure that will drive, say, the next PolyMarket, which uses USDC in Polygon as its main coin and chain.
“Now that stablecoins have finally become mainstream and banks are rushing in, the next level will be the services for users that rely on these assets behind the scenes.”
“The most significant growth areas are likely to be at the intersection of AI/Blockchain and RWA/Blockchain, as these represent the greatest opportunities for real-world impact and enterprise revenue generation.”
