Compiled by: Vernacular Blockchain

So far in 2025, cryptocurrency companies have raised more than $16 billion in funding and completed more than 100 mergers and acquisitions. The industry is expected to set a new record and exceed the total transaction volume for the whole year of 2024.

This cycle is on firmer footing, driven by a clearer regulatory environment in the U.S. and growing global momentum.

The wave of strategic mergers and acquisitions and initial public offerings (IPOs) is expected to continue into the next cycle.

Record-breaking M&A and IPO activity in 2025 is reshaping and elevating the cryptocurrency landscape. This is driving an influx of new capital, institutional interest, builders, and users for blockchain innovation and adoption. This pattern is mirrored in other major technological shifts, which require decades of infrastructure development before explosive growth. While the rise of artificial intelligence (AI) has benefited from decades of infrastructure investment, cryptocurrency's path to maturity is much faster. Its ability to leverage a more advanced technology stack and compound progress with better tools is driving the market's underlying momentum distinct from previous cycles, driven more by strategic consolidation than speculative speculation.

Momentum is accelerating: Why this cycle is different

The cryptocurrency market exhibits a sine wave-like pattern of fluctuations, experiencing ups and downs. Despite a slowdown in venture capital, underlying activity is bullish, driven by regulatory tailwinds, pro-cryptocurrency government policies, strong trading volume, increased investment in crypto by companies like Robinhood, and the deep intersection of crypto and related industries. After peaking in 2022, capital deployment declined sharply in 2023, before beginning to recover in 2024 and accelerating significantly in 2025. In the second quarter of 2025 alone, there were 31 deals exceeding $50 million, driven by late-stage financing such as IPOs, mergers and acquisitions, and debt financing. While the cryptocurrency market has attracted more capital ($16.1 billion) to date, crypto venture capital (VC) is similar to traditional VC, with capital concentrated in a smaller number of funds. Concentration of capital typically results in larger investments but fewer deals. This reflects the growth phase for many crypto companies and suggests that the fundraising environment is more competitive than ever for founders and investors.

A combination of forces is making this cycle unique. Token prices are rebounding, new products are being launched, founders are gaining confidence in entering the industry, and regulatory tailwinds are providing clarity for stablecoins and digital assets, unlocking further capital. For years, regulatory uncertainty has created friction for innovators and the Web3 space due to concerns about potential legal retaliation. With the Trump administration's friendly stance towards cryptocurrencies, we are witnessing the building blocks of on-chain adoption manifesting through legislation such as the Genius Act and the Clarity Act. While we cannot be certain of the far-reaching impact of these bills, it is certain that these discussions and actions will reduce hesitation to invest in this space, both intellectually and financially. Furthermore, the expected November interest rate cut by the Federal Reserve will drive further capital flows into risky assets, with Digital Asset Trading Systems (DATS) locking up capital in long-term assets. Investors are becoming less risk-averse, leading to more enthusiastic capital flows.

Investment allocation has shifted, with one-third of capital flowing into "bottom-up" opportunities such as perpetual swaps, token issuance platforms, prediction markets, and new decentralized finance (DeFi) primitives. The remaining two-thirds are directed toward "top-down" projects, including digital asset trading systems, real-world asset tokenization (RWA), exchange-traded funds (ETFs), and companies entering the public markets. These public market assets have dominated this cycle, which in turn has made crypto assets more accessible to the broader public, a sign of healthy industry development. This balance indicates that the market is maturing and prioritizing the integration of innovation with traditional finance.

There is a brief window to develop a legislative blueprint for cryptocurrency, and under the current pro-crypto administration, this window will exist until the 2026 midterm elections. The Decentralized Finance Education Fund has responded to the Senate Banking Committee's request for information on digital asset market structure and recently released a discussion draft of the Responsible Financial Innovation Act of 2025, which aims to protect software developers. Last week, the 2025 Wyoming Blockchain Symposium focused on digital asset regulation, emphasizing the urgency of establishing clear crypto regulations in the United States and the need for a balanced market structure. Members of the current administration attended the symposium, with the agenda focused on promoting forward-looking regulation. As we head into the first quarter of 2026, we can expect a more solid regulatory foundation than we've seen in previous cycles, especially given the tight timeline.

Token listing and IPO market restart

In 2025, token listings declined, with few new tokens able to maintain their upward trajectory, creating downstream headwinds for trading volume. Projects relying on token issuance found it difficult to secure funding without market traction. In contrast, the IPO window has reopened, with 95 companies listed on US exchanges in 2025, raising a total of $15.6 billion as of mid-June, a 30% year-over-year increase. Crypto-related IPOs, including Circle and BitGo, led the charge, ushering in a new trend of investors favoring crypto stocks over tokens. Circle's IPO on June 5, 2025, was a pivotal moment, with an issue price of $31 per share, which rose to $233 by mid-July, generating a return of more than five times and a market capitalization of $44.98 billion. Figure and Bullish also recently launched IPOs, with Bullish pioneering a stablecoin, raising $1.15 billion. BitGo's planned IPO and $100 million funding round during the 2023 bear market highlight investor interest. Crypto companies are now prioritizing revenue and growth over speculative token issuance. The surge in crypto IPOs and other “top-down” projects has attracted traditional investors with stable, revenue-driven business models. This is just the beginning of the IPO pipeline, with more companies set to go public in the coming months.

Mergers and acquisitions and industry maturity

2024 was a record year for mergers and acquisitions, with over 100 deals totaling $1.73 billion, and 2025 is expected to surpass 2024 in terms of deal volume. From January to July, 76 deals totaling $6.23 billion were completed, 3.6 times the full-year dollar total for 2024. If the current pace continues, 130 deals are expected. The momentum in 2025 is no longer about the release of pent-up demand, but rather a sign of the industry's natural maturation. Strategic acquisitions, such as Robinhood's acquisition of Bitstamp, demonstrate that established players are building comprehensive platforms. Robinhood's multi-billion-dollar bet on the future of cryptocurrency further bolsters the ecosystem's credibility. Its crypto revenue in the second quarter of 2025 increased 98% year-over-year to $160 million, while total company revenue grew 45% to $989 million, with profits of $386 million. Robinhood's adoption of blockchain infrastructure, a mainstay of retail stock trading, underscores the shift toward mainstream, regulated infrastructure. Likewise, late-stage deals like Securitize raising $400M from Mantle for tokenizing real-world assets in Q2 2025 and Kalshi raising $185M at a $2B valuation for prediction markets highlight the focus on revenue-driven, compliant business models.

The moves reflect the cryptocurrency industry’s focus on collaborating with financial incumbents rather than just chasing speculative opportunities.

The Macro Intersection of Cryptocurrencies

Cryptocurrency no longer exists in isolation; it is converging with today's cutting-edge technologies and global finance. In the field of artificial intelligence, OpenMind's OM1 + FABRIC technology stack addresses the "missing layer" problem in the robotics industry, enabling diverse robots to work together in a decentralized manner. Worldcoin's iris scanning authentication system, leveraging a blockchain-based identity layer, could enable AI agents to authenticate and transact autonomously, addressing the key challenge of agents securely interacting in cryptocurrencies. Decentralized AI platforms such as Sahara AI (a decentralized alternative to Scale AI) and Sentient (a decentralized Hugging Face) are disrupting traditional AI infrastructure. The application layer of crypto AI is still in its early stages, but its potential could create entirely new market structures through on-chain agents and trading systems, supporting high-frequency trading of tokenized stocks.

In the payments sector, stablecoins, particularly Circle's USDC, have become central to the global payment system. The Genius Act further accelerated USDC's adoption. Circle reported a 58.6% revenue increase to $579 million in the first quarter of 2025. Analysts predict that stablecoin transaction volume could reach $250 billion per day within three years and, if growth continues, could even surpass traditional payment systems like Visa within the next decade. Companies like PayPal and Visa are exploring stablecoin integration to integrate them into mainstream payment channels. Robinhood's integration with Arbitrum enables Robinhood users to trade USDC natively on Arbitrum, making stablecoin trading more accessible to retail users. Robinhood's partnership is just the tip of the iceberg; Arbitrum has played a key role in expanding stablecoin adoption, demonstrating how Layer 2 solutions can connect cryptocurrencies with traditional finance.

This convergence of key industries is attracting experts from AI, fintech, and consumer tech, blurring industry boundaries. Cryptocurrency, as the backbone of decentralized systems, is positioning itself as a critical layer in the global technology stack.

Looking to the future

We anticipate a structurally stronger market cycle in the fourth quarter of 2025 and the first quarter of 2026. Unprecedented regulatory clarity, expected interest rate cuts, and significant capital inflows from strategic M&A and IPOs are laying a solid foundation for accelerated growth. This renewed momentum, focused on real-world utility, is setting the stage for a period of accelerated growth. Our strategy is to capitalize on this opportunity through focused, high-conviction investments in Series A companies poised to define their categories.

The US IPO market has surged in 2025, with 224 IPOs so far. The first half of 2025 saw 165 IPOs, compared to 94 in the first half of 2024, a 76% year-over-year increase. Already, 185 crypto-related transactions have taken place in the first half of 2025, projected to surpass the 248 acquisitions in 2024. High-profile success stories like Circle and the trend of traditional financial giants acquiring crypto companies signal a strong cycle ahead.

The intersection of cryptocurrency with AI, payments, and infrastructure, combined with regulatory tailwinds and strong investor interest, will propel us into an era of accelerated growth that will continue to solidify cryptocurrency’s role as a pillar of global finance and technology.

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Source: https://www.veradiverdict.com/p/the-state-of-crypto-venture-capital