Crypto Funding Plunges 30% in August—$1.9 Billion Signals Market Cooling

Crypto's cash pipeline just hit a major slowdown—funding nosedived 30% last month to $1.9 billion. That’s not a typo. It’s the kind of drop that makes VCs suddenly remember they have ‘other portfolio priorities.’

Behind the Numbers

August wasn’t just a bad month—it was a reality check. After quarters of exuberant checks and ‘we’re-bullish-long-term’ tweets, investors finally tapped the brakes. Early-stage deals? Stalled. Late-stage mega-rounds? Gone quiet. Even DeFi and infrastructure—sectors that usually print money—felt the chill.

Not All Doom and Gloom

Let’s be real: this isn’t 2018. The ecosystem’s matured. Builders are shipping, regulators are… regulating, and real users are onboarding. But when funding dips this hard, it separates the committed from the tourists. The ones in it for the tech? They’re still building. The ones in it for the lambo money? They’re already looking at AI startups.

Finance’s Ironic Twist

Here’s the kicker: TradFi firms spent August complaining about crypto volatility—while their own bond portfolios tanked and inflation burned cash on the sidelines. Maybe a little volatility isn’t the worst problem to have.

Bottom line: The smart money isn’t leaving—it’s just getting smarter. And a little fear? That’s healthy. It keeps the moonboys quiet and the builders focused.

Daan Crypto says lower valuations on new launches have led to stable price performance

In a Thursday X post, market analyst Daan crypto Trades argued that investor interest has pivoted from continuous new-chain launches to treasury firms developing on existing projects. He noted that capital is now concentrated in liquid markets, reducing the amount of raises for new chains and similar ventures. Still, he argued that this trend is healthy for the market.

He explained that lower valuations on new launches have contributed to more stable price action following listings. “I’d say this is a good change for the market and the projects themselves,” he wrote, adding that it leaves room for potential upside for all participants.

According to DeFiLlama’s analysis, at the beginning of 2022, monthly raises reached $7 billion, although they’ve declined significantly to much lower levels, while 2025 has had some big spikes. Experts say it still lays the foundation for a healthier ecosystem for both builders and investors despite any pullback.

Outside of DeFi, AI protocols also gained significant inflows in August. Everlyn raised more than $15 million and several other seed-stage rounds in AI. Cybersecurity was another highlight category, led by IVIX’s $60 million Series B, the month’s largest traditional VC round. Stablecoin infrastructure followed closely behind, with Rain’s $58 million raise.

Additionally, payment infrastructure grabbed headlines after OrangeX raised a $20 million Series B and later rounds for cross-border and merchant payment solutions, some of which benefit from a higher penetration of crypto in commerce. Gaming projects were not excluded, with Overtake coming in with an investment of $7 million, and other protocols supported through ongoing development.

South Korea is lifting the VC funding ban on crypto firms

Crypto firms are expected to start receiving more financing, especially in South Korea. Following the State Council and cabinet’s approval, the Ministry of SMEs and Startups said it officially lifted the long-standing VC funding ban on September 16. 

As earlier reported by Cryptopolitan, the amendment to the Enforcement Decree will revoke the designation of crypto exchanges and brokerages as “restricted venture businesses,” effectively opening them up to VC participation. The measure dates back to October 2018, when the Moon administration introduced it to rein in an overheated and speculative crypto environment.

Much has changed since then. South Korea has taken strong steps to bring order to its crypto market, starting with the introduction in 2021 of a licensing system for VIRTUAL asset service providers. Following this, the passage of the Virtual Asset User Protection Act in July 2025 added deposit protection, mandatory record-keeping, and bans on unfair trading, all key measures that helped professionalize the industry and address past concerns.

Now the ministry stated the amendment mirrors the shifting global status of the cryptoasset sector. It pointed out that new legal frameworks will protect local crypto exchange users extensively and support growth in the digital asset ecosystem, particularly focusing on blockchain and cryptography-focused companies.

According to the government, the reform will also make it possible for crypto companies with proven technological capabilities and potential to access VC investment. The ministry emphasized that this will give them equal opportunities alongside other IT innovators. Minister Han Seong-sook remarked, “We will foster a transparent and responsible ecosystem. We will help facilitate the FLOW of venture capital and the growth of new industries.”

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