The 2026 H1 Crypto VC Report Unveiled What Cruel Signals
Source: Tiger Research
Authors: Henry Kim, Ryan Yoon
Compiled and organized by: bitPushNews
Crypto market capital is undergoing a paradigm shift — capital is being concentrated on specific tracks and leading companies at an accelerated pace. Tiger Research and RootData jointly analyzed a total of 9,416 investment transaction data from 2018 to the first half of 2026 to outline the changing trajectory of this capital pattern.
Core findings
In the first half of 2026, capital inflows to the crypto market reached $13.3 billion, almost the same as the full year of 2024's $13.2 billion. However, funding rounds plummeted to just 435, a sharp drop of 78% from the 2022 peak of 1,978.
The market is rapidly dividing: on one end there are a few large crypto-native venture capital firms that focus on leading investors, and on the other end are subsidiary investment departments that rely on exchange liquidity. Mid-sized funds, which are sandwiched in the middle and lack a clear competitive advantage, are being pushed out of the table at a speed visible to the naked eye.
Game circuit funding rounds plummeted from 141 in 2024 to just 5 in the first half of 2026, a drop of 96%.
The payments and stablecoin circuit, as well as capital inflows to the centralized exchange (CEX) circuit, are almost all driven by mergers and acquisitions.
Traditional financial institutions participated in 54.5% of all investment transactions recorded in the first half of 2026.
1. 2021 Market Review: Using speed and diversification as a strategy
The core strategy of the crypto investment market in 2021 is the pursuit of speed and portfolio diversification. In that year, investors executed a total of 1,750 transactions (including seed rounds), and competition for speed was so intense that AU21 Capital alone was able to close more than 13 transactions per month on average.
Investment decisions at the time were reduced to extremely simple standards, such as token generation event (TGE) timelines and tokenomics (tokenomics, a structure that governs how project tokens are issued and distributed). Since issuing tokens alone can generate returns without any actual product development, venture investors largely pursue a “spray and pray” (spray and pray) strategy, spreading funds across hundreds of projects, regardless of their high or low valuations.
Speed of execution was placed above strict due diligence. A new round of financing can close almost instantly, and venture capital firms that miss one round tend to chase the next project with a higher valuation. This fear of misunderstanding (FOMO) continues to circulate throughout the industry.
Most VCs running this strategy failed to survive the subsequent bear market, and those that survived fundamentally changed their investment methods.
2. Which Ventures Have Survived: The Industry Landscape Has Changed
2.1. Lead Investors: Past and Present
The first indicator we need to examine is “lead investment” (Lead Investment), which is the funding round that major venture capital firms have historically dominated.
Some venture capital firms are still active in leading investment deals, while others have completely disappeared or only recently emerged. Since leading a round of financing has always required the reputation and capital scale only large venture capitalists have, companies that have led major rounds in the past have shown strong resilience, and most of them are still in the top ten today.
2.2. Surviving the diversification of venture capital
Looking at the latest data from 2024 to 2026, crypto-native venture capital firms and established large institutions are concentrating their resources on leading investment transactions and participating more deeply in a single transaction. They changed their business model: reducing the overall number of transactions while raising the due diligence threshold, and actively seeking board seats and more influence over project governance.
However, the cumulative number of regular round participation (Round Participation) outside of lead investment transactions showed a very different picture.
Among the top 15 venture capital firms that participated from 2024 to the first half of 2026, venture capital institutions under the exchange account for a large share. Exchanges are far more willing to participate in financing rounds than lead investors. Among them, Coinbase Ventures ranked first with 140 transactions, OKX Ventures ranked second with 94, and yZi Labs ranked third with 92. Note: yZi Labs is an organization restructured after Binance Labs was renamed in January 2025.
HashKey Capital, ranked 7th, is the investment arm of Hong Kong Stock Exchange's HashKey Exchange; Mirana Ventures, ranked 14th, is Bybit's investment division. The venture capital departments of 5 major exchanges appeared in the top 15 alone. In contrast, large venture capital firms that focus on leading investments, such as Polychain and Pantera Capital, rank low in this index of overall number of invitations.
Venture capital institutions under the Centralized Exchange (CEX) have established themselves as core participants in major funding rounds by cooperating with the liquidity and marketing support that their platforms can provide. And midsize venture capital firms that lack clear and defensive advantages (whether it's economies of scale, brand awareness, or exchange-level liquidity support) are being rapidly squeezed out of the market under a vicious cycle of capital pressure and failed exit.
2.3. Outgoing venture capital: the end of the “wide casting net” strategy
Most venture capital firms that relied on quick token monetization to build a broad portfolio in the last bull market have since gone out of business.
The number of transactions between AU21 Capital, LD Capital, and Shima Capital dropped by as much as 98.9%, and they have actually lost their influence in the market. Once a long-term bear market and stricter regulation come, a strategy based on chasing short-term narratives won't work.
Failure to establish any substantial differentiation was the main reason for their failure, but it is also worth noting that the overall flow of crypto funds has moved to projects that have reached a certain level of maturity, and new projects requiring early funding are rare. In other words, the opportunities these venture capital firms rely on have stopped appearing in the market.
3. Funding round: buy fruit, not seeds
3.1. The collapse of the seed wheel
In the first half of 2026, the total number of seed round transactions was only 81, a sharp drop of 88% from 694 in 2022. The market's aversion to early projects with unproven business models and higher risk is evident. This trend is also reflected in the overall structure of funding rounds: seed rounds accounted for 35.3% of all transactions in 2022, and by the first half of 2026, that share had dropped to 18.7%.
The decline in the number of seed rounds can be interpreted either as investors' avoidance mentality, or as a simple shortage of new early projects looking for seed round funding. This is an indicator that captures both market contraction and market maturity.
3.2. Funds are concentrated in the later stages
Measured from the perspective of capital allocation, the latter round (round A and later) currently accounts for 75.2% of the total investment amount. During the bear market in 2023, seed stage investments briefly held the majority share, but once the market entered the recovery phase, capital was quickly redistributed to well-capitalized companies.
In the first half of 2026, the total amount of Series A funding (US$745 million) surpassed all seed phase capital raised (US$423 million), making it the largest category of any round.
The average transaction size showed a clear step-wise increase from one stage to the next: $5.4 million for the seed round, $22.4 million for the A round, $127 million for the C round, and up to $202 million for the E round. Although the sample size has shrunk in the later stages, the revenue and valuation of companies that have reached these stages have increased, so each round includes a corresponding larger amount of capital.
4. Overall market situation: trading volume declined, capital concentration was high
4.1. Differentiation between capital size and number of transactions
Total capital inflows reached $13.3 billion in the first half of 2026, while the total number of 435 transactions was just 22% of the number of transactions recorded in 2022 (the year with the highest number of transactions in the year, 1978). From 2024 to 2026, the total amount of capital remained stable or increased even though capital was concentrated in very few transactions.
Small diversified investments from venture capital firms chasing token liquidity events and betting on short-term returns have declined; in contrast, large-scale direct investments from traditional financial institutions have increased. Institutions have adopted more stringent standards, and they are not evaluating the token listing timeline or market narrative, but whether the company has an auditable revenue structure and the necessary regulatory licenses.
In the first half of 2026, there were 32 transactions of $100 million and above, accounting for 7.4% of all transactions, a significant increase from 1.1% in 2024. The average deal size nearly quadrupled over the same period, soaring from $11.7 million in 2024 to $47.4 million in the first half of 2026.
This increase in share is due to the dual effects of two dimensions. On the one hand, the number of large-scale transactions itself has increased; on the other hand, with the disappearance of small transactions, including seed rounds, the total number of transactions has declined. A small number of surviving projects began to dominate the market, and due to the evaporation of small transactions, the already limited large trading pool represented a larger proportion in relative share.
4.2. Traditional institutions are directly involved in risk rounds
The share of traditional financial institutions participating in investment transactions began rising from 29.2% in 2018, and broke more than half of the mark for the first time in 2021, reaching 53.9%. During the last slump (2023), participation declined briefly to 45.2%, but rebounded to 54.4% in 2024 as regulations became more clear, fell back to 50.9% in 2025, and reached 54.5% in the first half of 2026. Since crossing the majority for the first time in 2021, institutional participation has remained high.
For example, a16z led a $355 million funding round for Canton Network developer Digital Asset, but core institutional participants including BNP Paribas (BNP Paribas), HSBC (HSBC), S&P Global (S&P Global), and Hanwha Investment & Securities (Hanwha Investment & Securities) chose to invest directly rather than through its venture capital subsidiary.
Investments in the past were mainly in the earliest stages, but now, the growth of crypto venture capital firms and the entry of traditional investors have pushed more capital into companies that already have a certain level of maturity.
5. Major Sectors: Surviving Change
2024 was a year where the approval of a Bitcoin spot ETF coincided with a more constructive regulatory environment, creating the first clear sector-level capital flow since the bear market. This analysis uses 2024 as the reference year for sector comparison.
In 2024, when the Bitcoin ETF was approved, the infrastructure sector accounted for half of the total investment capital, with a share of 50.9%. However, by the first half of 2026, this share had declined sharply to 14.8%. Instead, payments and stablecoins (25.3%), centralized exchanges (18.2%), and prediction markets (17.5%) took the lead, completely reshaping the sector landscape.
This transformation shows that the nature of blockchain infrastructure has changed — from an independent investment target to an actual platform that traditional institutional businesses can directly put into use. Typical examples include Robinhood running its autonomous network layer built on Arbitrum, and Securitize's adoption of Solana and Avalanche as its settlement layer in the same period that it listed on the New York Stock Exchange. In other words, the current core requirements of the capital market have gone beyond the stage of “building a new protocol infrastructure from scratch” to “actually operating real-world financial services on top of the existing infrastructure layer.”
5.1. The Laggards: Gaming, NFTs, and Social
All three sectors experienced sharp declines in trading volume. Gaming plummeted from 141 transactions to 5, NFTs from 27 to 2, and social and entertainment from 74 to 11.
In these three areas, capital inflows are also following the same downward trajectory. Gaming capital shrunk from $758.6 million to $44.8 million, NFT capital shrank from $1.149 million to $14.7 million, and social and entertainment capital shrunk from $5121 million to $70.1 million.
Among them, the decline in games was the most severe. Early GameFi models (combining games with token-based rewards) often relied too much on issuing tokens to obtain financial rewards rather than building sustainable gameplay. Once the growth of new users slows down, this model falls into a so-called “death spiral” — in this structural cycle, the decline in token value and loss of users are causal and vicious, and the project parties have never found a way out of this predicament. As a result, user traffic data, which was once the core indicator of due diligence, lost its reliability, and capital inflows into this sector were actually cut off.
5.2. DeFi: Quietly moving forward, steady pace
The number of transactions in the decentralized finance (DeFi) sector fell by 71%, but total investment fell by only about 34%. The average transaction size actually increased, from $4.5 million in 2024 to $10.4 million in the first half of 2026, which indicates that capital is being concentrated in a few large deals as the overall number of transactions shrinks.
The main driving force behind this concentration comes from the lending protocol Morpho's token sales round for traditional institutions and investment companies. With its modular lending protocol, Morpho opened up the DeFi Vault (Vault) market to institutions and redefined DeFi risk standards, raising $175 million in a token funding round led by a16z crypto, Paradigm, and Ribbit Capital on June 9, 2026. This transaction alone accounted for 17.7% of all DeFi investments in the first half of 2026, clearly reflecting how concentrated the market has become.
In other words, the DeFi sector has bid farewell to the growth of the broad underlying ecosystem, and funds have been invested in a few market-proven protocols.
5.3. Payments and stablecoins: the fastest growing sector
The number of transactions in the payments and stablecoin sector has been growing at an accelerated pace on a monthly average basis. Over the same period, total investment jumped about 20 times, from $143.9 million to $2.85 billion in the first half of 2026. However, much of this growth is due to a few huge mergers and acquisitions (M&A) deals.
The biggest deal in the first half of 2026 was Mastercard (Mastercard)'s acquisition of BVNK for $1.8 billion in March, followed by Payward (Kraken's parent company)'s acquisition of Reap for $600 million in May. These two deals alone accounted for around 84% of the sector's total investment in the first half of 2026. Additionally, cross-border payment and crypto card issuers, including Rain ($250 million) and KAST ($80 million), have maintained steady financing, supporting the sector's growth.
These recent large-scale mergers and acquisitions suggest that traditional payments companies and mainstream Web3 institutions have gone beyond simple business partnerships and are directly controlling stablecoin infrastructure through acquisitions. Stripe is the clearest example of this battle for ecosystem standards (which began with its acquisition of Bridge in October 2024).
Following the acquisition of Bridge, Stripe partnered with Paradigm to build Tempo, a blockchain focused on stablecoin payments, and successfully launched its mainnet in March 2026. In June of the same year, Bridge's co-founder Zach Abrams became the interim head of the Open USD (OUSD) operating entity — a global consortium stablecoin project with over 140 participating companies.
The OUSD project has adopted Bridge, which was acquired by Stripe and continues to be developed, and Tempo, built by Stripe, as its core initial infrastructure. With the assets and talent that Stripe acquired through the acquisition, it now controls two pillars simultaneously: its own private platform and an industry consortium that aims to set industry standards. This shows that competition over stablecoin infrastructure has completely surpassed company-level asset acquisitions and evolved into a competition over who can set global standards for the entire market.
5.4. Centralized exchanges (CEX): venture capital is no longer a necessity
The centralized exchange (CEX) sector's share of total investment soared from 3.0% in 2024 to 18.2% in the first half of 2026. However, this growth can hardly be interpreted as the expansion of traditional venture capital into new exchanges, as mergers and acquisitions (M&A) transactions accounted for 75.5% of the total investment in the CEX sector on record from 2024 to the first half of 2026. This share climbed from 58.8% in 2024 to 78.9% in 2025, reflecting overwhelming concentration.
Although overall capital inflows declined from the peak of $19.4 billion the previous year when major mergers and acquisitions were concentrated, they remained more than six times the level of 2024 ($340 million). The number of transactions has not slowed down, maintaining a steady pace on a half-yearly basis. The 23 deals recorded in the first half of 2026 meant an average of 3.8 transactions per month, faster than 2.8 per month in 2024 and 3.0 per month in 2025.
In other words, the CEX investment market is showing a reshuffle centered around a few large operators. Naver's acquisition of Dunamu's shares is currently under regulatory scrutiny, but it's the biggest deal announced in that period; it was closely followed by Coinbase's acquisition of Deribit for $2.9 billion and Kraken's acquisition of NinjaTrader for $1.5 billion.
Abu Dhabi's sovereign wealth fund MGX's $2 billion strategic investment in Binance fits the same pattern. Meanwhile, venture capital firms under existing major exchanges (such as OKX Ventures and HashKey Capital) are participating more actively in their own investment rounds and acquisitions. As a result, CEX players are increasingly playing a dual role: they are both investment targets and strategic investors.
5.5. Predicting the market: the birth of a new sector
The forecasting market has evolved into an emerging sector that provides liquidity for real-world macroeconomic indicators such as economic data, elections, and policy decisions. The catalyst for the sector's growth came from formal regulatory approval granted by the US Commodity Futures Trading Commission (CFTC) in May 2025, which opened the door for large-scale capital inflows from hedge funds and asset managers as the sector enters the mainstream of compliance.
Kalshi's cumulative trading volume in June 2026 surpassed $100 billion. Prior to that, it had completed a $1 billion funding round led by Paradigm in December 2025, followed by another round of $1 billion led by Coatue.
Polymarket raised capital from the traditional large exchange operator, the Intercontinental Exchange (ICE). ICE promised up to $2 billion in funding in October 2025, of which $1 billion was actually deployed, and an additional $600 million was added in March 2026, bringing its cumulative investment to about $1.6 billion.
The forecasting market segment is not showing a situation where many new projects compete with each other, but is solidifying into a specific structure: traditional financial institutions and top institutional capital, continuously injecting huge sums of money into the two core players that first obtained regulatory approval.
5.6. Hosting: Understated but not to be underestimated
The escrow sector grew fifteen times, from $20.4 million in 2024 to $3171 million in the first half of 2026. In the first half of 2026, Anchorage raised $100 million in strategic investments, which meant that Anchorage alone accounted for about one-third of the total sector's investment during that period.
For traditional institutional asset management companies that want to directly hold crypto assets, a custodial infrastructure that meets regulatory requirements is essential. The segment grew as institutions continued to grow in demand for asset management and crypto custodian services.
All of the sections discussed above share a common logic: each sector maintains a stable capital flow base through the financing rounds described in this article, and in every case, this infrastructure demand is created by the compliance needs of institutions to enter the market.
6. The new standard for crypto capital: from betting to control
Overall, the focus of crypto investment has moved from “seed sowing” short-term speculation to holding real equity at the infrastructure and protocol level.
Before the Bitcoin ETF was approved and the regulatory environment improved in 2024, the crypto market was more like a blind casino — funds were scattered over 100 projects, driven by narratives and emotions. This strategy eventually led to the collapse of gaming and the NFT circuit, and also eliminated the obsessive VC.
Today's capital targets are no longer short-term bets, but long-term control of investment targets and on-chain infrastructure. They concentrate huge sums of money on a few projects with auditable revenue structures and regulatory licenses, or directly acquire shares to control the underlying facilities themselves.
In the past, investing in an early project was more like a VC sending a signal to the market — as long as “smart money” went in, it could raise the token price or attract retail investors to follow the trend in the early stages. But today, this kind of direct acquisition of infrastructure and licensed structured capital will no longer send any signal to retail investors that they can follow.
Retail investors are no longer sensitive to news about VC investment. The fundamental reason is that market capital itself has undergone this structural transformation. Today, retail investors, like VCs, need to use a prudent perspective to measure investment targets. The old way of “keeping your eyes closed and betting” doesn't work for anyone anymore.
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