The new reality centers on revenue generation and willingness to pay as core indicators of product-market fit, underscored by profitable paths at ventures like Hyperliquid and Pump.fun.

Without a clear, sustainable revenue path, many crypto projects will struggle to secure funding in the current cycle.

Crypto-native funds are shifting toward traditional startup strategies and adjacent sectors like fintech and AI, with renewed emphasis on stablecoin infrastructure and on-chain prediction markets instead of core crypto plays.

Notable shifts include Mechanism Capital, Tangent, and Multicoin Capital reorienting toward tech such as robotics and AI, while exposure to NFTs, Web3 gaming, and other speculative plays is being reduced.

Industry consolidation accelerated, with October peaking at 22 M&A deals; by early 2026 several crypto ventures halted or downsized, including Farcaster returning capital, Nifty Gateway closing, and Rodeo winding down.

Bitcoin and broad altcoins tumbled, with Bitcoin down roughly 50% from its October peak and the broader altcoin index down about 70% year over year, weakening retail-driven demand.

Success stories like Hyperliquid and Pump.fun are cited as examples where product-market fit and revenue generation coexist with ongoing crypto activity.

An identity crisis is unfolding for crypto venture capital as falling asset prices and market consolidation expose fragility in a model built on speculation rather than sustainable revenue.

Industry observers warn some crypto funds may shut or downsize amid market pressures and shifting priorities.

Last year’s capital deployment was highly concentrated, with about a third of 2025 VC funding going to just four deals, signaling elevated risk-taking and limited diversification.

Despite a strong fundraising year in 2025 of about $18.9 billion for crypto startups (excluding digital-asset treasuries), activity remains below 2021–2022 highs and shows concentrated deployment.

Venture activity reflects consolidation, with roughly one-third of 2025 funding going to a few large deals like Binance and Polymarket while many projects with weak monetization fail to attract fresh capital.