Author: Azuma, Odaily Planet Daily
The bear market in cryptocurrencies continues, yet some highly significant moves have emerged in the primary market.
On May 4th, Haun Ventures, the venture capital firm founded by former U.S. federal prosecutor Katie Haun, announced the completion of a funding round totaling $1 billion. The early-stage and later-stage funds will each be allocated $500 million, primarily to be invested over the next 2 to 3 years in startups within the cryptocurrency and blockchain sectors, while also expanding into intersecting areas such as AI agents, fintech, and alternative assets.
Just one day later, a16z followed up by announcing the close of its fifth cryptocurrency fund, Crypto Fund 5, securing $2.2 billion in committed capital. The fund will continue to deepen its focus on the cryptocurrency market, concentrating on the often-overlooked yet most value-creating parts during cyclical shifts, transforming next-generation infrastructure into products people use daily.
Looking back further in the timeline reveals that this is not a coincidence but more like a "collective consensus" among leading VCs.
In February of this year, Dragonfly's Fund IV completed a $650 million raise. At the end of February, multiple media outlets reported that Paradigm was seeking to raise up to $1.5 billion for its next fund. In March, ParaFi announced the completion of a $125 million raise. In late April, sources revealed that Blockchain Capital was raising $700 million for two funds... Within less than three months, just these six VCs alone have quietly amassed over $6 billion in funding.
More crucially, this wave of fundraising did not occur at the market's peak but during the bearish phase characterized by depleted altcoin liquidity, declining primary market valuations, and persistently low industry sentiment. As a16z partner Chris Dixon stated, "We are in a relatively quiet stage." This is not a bullish follow-up but a typical counter-cyclical deployment.
The Primary Market is Diverging
Focusing solely on the $6 billion fundraising amount can easily create the illusion of "a primary market recovery," but the reality is far more complex. Surveying the current survival status of top-tier VCs versus mid-sized and smaller VCs reveals a clear trend of divergence in the primary market.
For most mid-sized and smaller VCs, this cycle is proving much tougher than anticipated. Due to the continued slump in altcoins (largely missing the entire bull run) coupled with tightening liquidity in the secondary market, exit channels for funds are severely obstructed. Paper profits often shrink or even turn negative over prolonged vesting periods. The disappointing investment returns have directly led to a decline in LP confidence, making fundraising for new funds increasingly difficult.
Consequently, we are witnessing the passive contraction of most mid-sized and smaller VCs during the bear market: some have chosen to downsize their funds and reduce deployment frequency; others have transitioned to pure secondary market funds; and some have exited the market entirely. Many mid-sized VCs that were highly visible during the last bull run have now vanished from the scene.
In stark contrast are the leading VCs still raising funds aggressively. Although their investment pace has also slowed with the market downturn, leveraging structural advantages, their dominance in the primary market is actually strengthening.
Regarding these structural advantages, firstly, top VCs typically possess stronger resource monopoly capabilities, enabling them to capture rare high-quality projects more effectively (prime examples include Kalshi backed by a16z and Paradigm, Polymarket backed by Dragonfly and ParaFi, Blockchain Capital which invested in Coinbase and Circle). Secondly, top VCs can cover the entire investment cycle, from early pre-seed and seed rounds to later Series A and B, offering more opportunities for late entry or amplified gains. Thirdly, top VCs have greater room for error, with larger AUM allowing them to withstand relatively higher failure rates and bet on longer-term narratives. Fourth, the brand power of top VCs translates to stronger bargaining power, often securing more favorable terms than mid-sized VCs even within the same funding round.
This structural disparity in advantages and disadvantages ultimately leads to market divergence, where the Matthew effect becomes increasingly pronounced. In a bull market, mid-sized VCs might still pull off a comeback with a few lottery-ticket wins, but during a bear cycle, this trend only intensifies.
What Are These $6 Billion Targeting?
Based on disclosures from these six VCs, the newly raised $6 billion is earmarked for the following sectors and directions.
- Dragonfly: Bullish on crypto financialization trends, specifically mentioning stablecoins, prediction markets, agent payments, on-chain privacy, real-world asset tokenization.
- Paradigm: Expanding beyond crypto into AI, robotics, and other frontier tech areas.
- ParaFi: Stablecoins, asset tokenization, institutional-grade on-chain financial products.
- Blockchain Capital: Focused on early-stage and growth-stage crypto startups.
- Haun Ventures: Bullish on next-gen financial infrastructure, including stablecoins, asset tokenization, prediction markets, and also optimistic about the agent economy.
- a16z: Mentions financial infrastructure like stablecoins, DeFi, prediction markets, asset tokenization. Also believes that in the era of the AI explosion, crypto networks' inherent properties can still address software transparency and verifiability issues.
Placing the public statements of these six VCs side by side, while differences in emphasis remain, overall they have converged significantly.
The core consensus undoubtedly centers on the new generation of on-chain financial infrastructure represented by stablecoins, asset tokenization (RWA), prediction markets, and on-chain payments. Whether it's Haun Ventures, a16z, Dragonfly, or ParaFi, these keywords are repeatedly mentioned in their new fund directions. To some extent, this signals a shift in the investment logic of the crypto industry. Compared to the more sentiment-driven bets of the last cycle, this time, leading VCs are placing greater emphasis on infrastructure-type projects that have preliminarily validated real demand and have the potential to capture traditional financial flows in the long term.
Additionally, leading VCs are significantly ramping up their AI-related investments. Paradigm has explicitly stated it will allocate part of its funds to AI and robotics, while Haun Ventures and Dragonfly have also mentioned agent-related directions. The reasons behind this trend are not complicated: on one hand, AI is currently the most certain major theme in the global tech industry, a space top VCs cannot afford to miss; on the other hand, the crypto industry is also trying to prove that it is not merely an old narrative marginalized by the AI hype but can become part of the underlying infrastructure for the AI era — especially as the agent economy gradually emerges, the inherent openness, composability, and permissionless nature of crypto networks are beginning to demonstrate renewed value.
Bear Market Fundraising is Essentially a Bet on the Next Cycle
For VCs, the bear market is often the stage that truly determines the future landscape.
While funds are easiest to raise during a bull market, project valuations and entry barriers are often also at their highest. It is only when market sentiment is low, liquidity dries up, and industry narratives falter that the opportunity for VCs to capture excess returns through judgment is truly amplified.
Looking back at past cycles, bear markets do not kill truly high-quality projects; instead, they accelerate market shakeouts, allowing the "gold to shine faster." This is why, even with current market sentiment remaining low, leading VCs are still raising funds counter-cyclically.
Because what they are truly betting on is never the "present," but rather who will become the next Circle, the next Hyperliquid, the next Polymarket once the next cycle begins.
