Binance’s $2B Deal Masks Underlying Slowdown in Crypto Venture Capital

Portalkripto.com – Despite a flashy headline number, the crypto venture capital landscape in Q1 2025 remains far from a true recovery.

Based new report from Galaxy, crypto startups raised $4.9 billion across 446 deals in Q1 — up 40% from the previous quarter — marking the highest capital influx since Q3 2022.

However, nearly half of that funding came from a single late-stage deal: Binance’s $2 billion raise from MGX, a UAE government-affiliated fund based in Abu Dhabi. Without this one-off transaction, total VC investment would have been just $2.6 billion — among the lowest levels in the past four years.

The quarter marked a shift, with later-stage companies absorbing 65% of total capital — the highest share since Q3 2020. In contrast, early-stage and pre-seed deal activity continues to decline, reflecting maturing market dynamics and waning investor appetite for speculative early bets in gaming, NFTs, and Web3.

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Altcoin malaise and ETPs shift institutional strategy

While Bitcoin prices remain strong, liquid altcoin markets continue to underperform — dampening enthusiasm for riskier startup bets. At the same time, the emergence of spot Bitcoin ETFs in the U.S. appears to be diverting capital away from early-stage venture investing.

Institutions such as pensions and endowments are gaining crypto exposure via liquid ETPs, rather than backing high-risk startups.

Ethereum-based ETPs are also gaining traction, and further launches targeting other blockchain ecosystems may further erode capital flows to DeFi and infrastructure startups.

U.S. remains dominant despite regulatory headwinds

Startups headquartered in the United States accounted for the largest share of both deal volume and capital raised — even amid continued regulatory uncertainty.

Pro-crypto developments under the new U.S. administration could reinforce this lead, especially if stablecoin legislation and market structure reforms gain traction in Congress.

Still, venture fund formation remains sluggish. Just 18 new crypto-focused VC funds launched in Q1 2025, attracting $1.9 billion — but new fund count remains near 5-year lows, highlighting broader allocator caution.