Crypto Financing Reaches $4.9B in Q1 2025, Driven Primarily by US Companies

In the first quarter of 2025, the cryptocurrency venture capital reached $4.9 billion, signaling a notable rebound in the sector. This figure represents a 40% increase compared to the previous quarter, deriving from 446 transactions, which also shows a 7% growth during this timeframe. This marks the most active quarter for crypto fundraising since late 2022.

A significant portion of this total can be attributed to MGX’s $2 billion investment in Binance, accounting for over 40% of the entire capital raised. Without this transaction, the funding for the first quarter would have totaled $2.8 billion, indicating a 20% drop from the last quarter of 2024.

Investment Distribution in Crypto

The investment in Binance propelled the Trading, Exchange, Lending, and Investing sector to the forefront, attracting $2.55 billion, reflecting a growth rate of 47.9%. Excluding Binance, the DeFi sector would have ranked first for the quarter with $763 million in inflows.

Projects related to Web3 garnered the highest number of investment deals, encompassing gaming, NFTs, DAOs, and metaverse projects, with 73 rounds making up 16% of all transactions. Following closely were trading-related firms, with 62 deals recorded.

There has also been a noticeable shift in the type of investments being made. For the first time since early 2021, around 65% of the total capital was directed towards later-stage companies. Although early-stage rounds saw a slight decline, they remained relatively strong compared to previous cycles.

Startups based in the United States led the funding landscape, representing 38.6% of the total deal volume. The United Kingdom followed with 8.6%, while Singapore and the UAE accounted for 6.4% and 4.4% respectively. The increase in U.S. investments could reflect enhanced governmental support for digital assets.

Correlation with Bitcoin Price

The analysis indicated a resurgence in the correlation between Bitcoin prices and venture investments, which had weakened since early 2023 but is now showing strength over a multi-year span.

Despite the year-over-year growth, challenges persist for fundraising efforts. Factors such as cautious sentiment among investors and the lingering effects of the downturn experienced from 2022 to 2023 continue to impact the market.

Moreover, the burgeoning interest in AI has diverted attention away from cryptocurrency. The AI sector now captures a level of focus similar to what crypto had in 2021 and early 2022, as shown by a decrease in funds raised by crypto-centric venture funds, which dropped to $1.9 billion in the first quarter.

Nevertheless, there is optimism for the year ahead, with indications that 2025 is set to surpass the fundraising totals of the previous year.