Crypto VC Funding Surges to $4.65B in Q3, Second-Highest Since FTX

Core Insights - Crypto venture funding surged to $4.65 billion in Q3, marking a 290% increase from Q2 and the second-highest level since the FTX collapse [1][3][9] - The rebound indicates a stronger-than-expected appetite for digital-asset startups, despite overall activity remaining below the levels seen during the 2021-2022 bull market [3] Funding Trends - Key areas attracting capital include stablecoins, AI-driven crypto tools, blockchain infrastructure, and trading technology, while early-stage activity remained steady [4] - The quarter's fundraising was heavily concentrated, with seven deals accounting for half of the total investment, highlighting a trend where major players dominate capital absorption [5][6] Company Dynamics - Established companies, particularly those founded around 2018, received the majority of funding, while younger firms launched in 2024 represented the highest number of deals, indicating strong early-stage interest [7] - The share of pre-seed funding has consistently declined, suggesting a shift in investor preference towards more mature firms and liquid products like Bitcoin ETPs [8][9] Market Sentiment - The renewed momentum in funding comes after nearly two years of muted investment due to the fallout from FTX's fraud, which significantly impacted confidence in the sector [5] - The current market cycle has not seen a corresponding surge in venture financing, attributed to waning interest in previously popular categories like NFTs and Web3 gaming, alongside competition from AI startups [8]