Crypto venture capital activity plummeted in May 2025, hitting its lowest point in over four years. Only 62 investment rounds were completed, matching the slowdown last seen in January 2021, according to data from analytics platform RootData. The sharp drop reflects investor caution amid uncertain market and global economic conditions.

Despite the dip in deal count, total capital raised reached $909 million—ranking May the second-highest month in 2025 by value. March still holds the top spot with $2.89 billion raised from 78 rounds. Experts attribute the slowdown to shaky sentiment and declining market momentum following a strong start to the year.

Nansen’s principal research analyst, Aurelie Barthere, pointed to weakened crypto prices and renewed tariff concerns as key contributors to investor hesitation. Sentora’s Patrick Heusser echoed this, blaming high interest rates and bond market volatility for choking off new capital deals. Most transactions, he noted, are now consolidation plays, a classic sign of market cooling.

Yet, merger and acquisition (M&A) activity appears unfazed. On May 8, Coinbase made headlines with its record-setting $2.9 billion acquisition of Deribit, marking the largest crypto M&A deal ever. Barthere added that major companies are favoring direct acquisitions over VC deals, especially as regulation becomes clearer.

RedStone co-founder Marcin Kazmierczak suggested this downturn may be seasonal, expecting a resurgence in Q4 as investors return from the summer slowdown. Until then, the crypto startup ecosystem may need to rely more on strategic mergers than venture capital to survive the mid-year freeze.