As of July 31st, CryptoRank recorded 153 different venture capital institutions participating in crypto funding for the month, the lowest monthly level since November 2020. This figure represents the number of unique institutions that participated in at least one disclosed crypto funding round after deduplication, not the total number of VC firms left in the market.
This number peaked at 1177 in a monthly high in 2022 and has since decreased by about 87%. In the second quarter of 2026, a total of 651 institutions participated in crypto funding, a decrease of about 75% from 2564 in the second quarter of 2022.
According to CryptoRank data, this metric hit 395 in March 2026, briefly rose to 314 in May, and then dropped to 244 in June.
However, on the other hand, the reduction in crypto VC firms comes amid a global expansion in venture capital. In the second quarter of 2026, global venture capital reached $227.4 billion across 8440 deals, marking the second-highest quarter on record; the total investment for the first half of the year reached $560.4 billion, second only to the same period in 2021. Large financings for AI companies like Anthropic, Prometheus, and DeepSeek were key drivers.
According to KPMG, as of the end of the second quarter, global VC funds raised approximately $98.8 billion year-to-date across 727 funds. Of these, 19 funds raising over $1 billion each collectively attracted $53.2 billion, accounting for over half of the total. Transaction volume remains subdued, with substantial funds mainly flowing into AI and mature companies with proven business models.
Amidst this frenzy, funding and transaction volume in the crypto market have declined in sync. According to Galaxy Research, in the first quarter of 2026, crypto and blockchain startups completed 355 funding rounds, raising around $4 billion, representing a 16% and about 50% decrease, respectively, quarter-over-quarter. Only 8 new crypto VC funds were raised in the quarter, totaling approximately $1.1 billion, the lowest since the third quarter of 2020.
Galaxy attributed its fundraising difficulties to multiple factors, including historical return pressure due to industry volatility from 2022 to 2023, the macro environment, AI competition for limited partner funds, and the availability of higher liquidity through spot crypto ETFs and digital asset treasury companies. Global funding remains ample, but allocation focus and manager lists are narrowing.
First 7 Months Funding Reached $11.778 Billion, with May Contributing One-Third
As of July 31, according to the CryptoRank public dashboard, crypto projects in the first 7 months of 2026 completed 481 funding rounds, with a disclosed total amount of approximately $11.778 billion.
May peaked in the year with $3.889 billion and 87 rounds of funding, accounting for about 33% of the total in the first 7 months. April had only $0.698 billion and 71 rounds, with May's funding amount increasing 5.6 times from the previous month, while the number of rounds increased by only about 23%. Projects of a similar magnitude can correspond to vastly different total funding amounts, indicating that a few large transactions are still dominating the monthly trend.
March and May collectively absorbed about $6.088 billion, accounting for approximately 52% of the total in the first 7 months of the year. Funding in June dropped to $1.479 billion, and in July it was $1.473 billion, with the number of disclosed rounds decreasing from 61 to 39.
Exchanges, Prediction Markets, and Payments Absorb 53% of Funds
According to CryptoRank's project category breakdown, exchanges, prediction markets, and payments rank in the top three in funding amounts for the year, receiving $2.490 billion, $1.897 billion, and $1.861 billion, totaling approximately $6.247 billion, which accounts for 53% of the first 7 months' total funding. AI ranks fourth with $1.305 billion.
Interestingly, DeFi ranks first with 78 rounds but only receives about $0.654 billion; payments and AI complete 73 rounds and 65 rounds, respectively. High-frequency early-stage funding still exists, with funding concentrated more on exchanges, prediction markets, and other tracks capable of accommodating large late-stage transactions.
The funding stage further amplifies this difference, with CryptoRank recording only 20 rounds for Series C and beyond, absorbing approximately $33.33 billion; the seed stage, including Pre-Seed and Extension rounds, has a total of 156 rounds, with a disclosed amount of about $7.50 billion. Strategic funding has completed 127 rounds, totaling around $27.18 billion. Rounds are mainly distributed in the early and strategic funding stages, with the funding peak driven by a few late-stage projects.
The cryptocurrency industry's M&A amount increased from $272 million in Q4 2025 to $7.23 billion in Q2 2026, expanding over 26 times in six months. This amount is not included in the aforementioned $117.78 billion funding volume but indicates that funds are flowing through acquisitions to companies that have already established business and assets.
Investment institution rankings also show a concentration trend, with Coinbase Ventures participating in 34 funding rounds within a year, while Animoca Brands, a16z crypto, and Tether participated in 19 rounds, 18 rounds, and 17 rounds, respectively. A single institution repeatedly investing may increase transaction volume but does not increase the unique investor count, explaining the coexistence of ongoing funding activities and a continued decline in the total number of active institutions.
Top Funds Still Able to Raise Capital as Long-tail Institutions Decrease Project Choices
In February, Dragonfly completed a $650 million scale for its fourth fund, while a16z crypto announced the raising of a $2.2 billion fifth fund in June. According to Galaxy Research, only 8 new crypto venture funds completed fundraising in Q1 2026, totaling about $1.1 billion, the lowest since Q3 2020. Leading fund managers can still obtain large amounts of capital, but the list of institutions with sustainable fundraising is shrinking.
Dragonfly partner Rob Hadick previously described in an interview with Fortune magazine that the crypto venture capital industry is undergoing a "great extinction." The number of active institutions has shrunk by nearly 90% from its peak, deviating from the simultaneous global expansion of venture capital during the same period, indicating that this contraction is more of a fund allocation shift. The AI track and secondary market tools have diverted capital that originally flowed into primary crypto projects, a trend that is difficult to reverse in the short term.
However, early-stage projects can still maintain a certain number of transaction frequencies, but with limited individual sizes; large funds are concentrated in a few late-stage tracks such as trading platforms, prediction markets, and M&A transactions. This implies that the primary crypto market has not disappeared, but the funds' risk appetite has significantly converged, preferring to flow to targets with existing business validation and asset accumulation.
A herd of mega funds has completed substantial fundraising, while a large number of small and medium-sized institutions are no longer participating in new funding rounds. This trend has had a real impact on startup teams, with a reduced number of accessible investors, tighter negotiation terms, and higher project selection criteria. The decrease in the number of institutions, fund sizes, and transaction frequency is not necessarily a negative signal, but it does indicate that the industry threshold is rising, with increased demands on project quality, funding efficiency, and exit strategies.
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