Key Highlights
- 85% of tokens launched in 2025 are trading below their launch price, including many VC-backed projects.
- Crypto VC fundraising has collapsed, with last quarter raising just 12% of Q2 2022 levels.
- The raise–launch–dump model is breaking, forcing teams to focus on users, revenue, and real products.
Most tokens launched in 2025 are already trading below their issue price, underscoring how sharply the crypto venture capital model has deteriorated. According to data shared by Galaxy Research, nearly 85% of tokens issued this year are underwater, including many backed by well-known venture funds.
The numbers show that venture backing is no longer acting as a post-launch catalyst. In fact, several Venture Capital (VC)-backed tokens are sitting deep in the red, while only a small minority have managed to hold or exceed their launch valuations.
Just a few years ago, having a “top VC” on the cap table was often enough to generate momentum. That signal has largely lost its power.
VC-backed deals struggle to break even
The data suggests that even professionally structured, venture-backed launches are failing to deliver returns. Performance across most 2025 token launches has been flat at best. A large number of tokens were sold off soon after listing, with prices slipping quickly once they reached public markets.
That’s a noticeable change from earlier cycles. In the past, VC involvement usually helped drive early demand and keep prices supported after launch. This time around, liquidity is tighter, speculation has cooled, and traders are far less interested in buying into stories without clear follow-through.
The hangover from the 2022 fundraising boom
The current situation can largely be traced back to 2022. During the second quarter of that year, crypto venture firms raised nearly $17 billion, and more than 80 new crypto-focused funds entered the space in a short span of time.
With so much capital chasing deals, limited partners were willing to fund almost anything tied to crypto. Valuations climbed quickly, deals were done fast, and many projects raised money long before they had real users, working products, or any revenue. Tokens launched soon after, setting supply dynamics that, in hindsight, no longer match today’s level of demand.
VC returns have been falling since 2022
Since that peak, venture performance has steadily weakened. VC ROI has been declining year after year, new fund creation has slowed sharply, and the number of fresh crypto funds has dropped to a five-year low.
Fundraising data reinforces the trend. Capital raised last quarter came in at just 12% of what crypto VCs raised in Q2 2022, a clear sign of how sharply investor appetite has cooled since the last cycle. The contrast with the 2022 funding peak highlights how much harder it has become for venture firms to attract fresh commitments.
Why recent deployment numbers are misleading
Recent headlines pointing to $8.5 billion deployed last quarter, an 84% jump quarter-on-quarter, don’t tell the full story. That increase does not reflect new money entering the system.
Most of the capital being deployed today comes from funds raised during the 2022 boom. When viewed over a longer period, the picture becomes clearer: total capital deployed between 2023 and 2025 is roughly equal to what VCs raised in 2022 alone. That suggests limited partners are not meaningfully increasing exposure, and new conviction remains weak.
In effect, current activity reflects firms working through old reserves rather than a renewed wave of confidence in the sector.
The token launch playbook is breaking
The familiar crypto playbook — raise a private round, launch a token, and sell supply into public markets — is losing effectiveness. Retail participation has thinned, and token economics are now under far closer scrutiny than in past cycles.
As a result, launches with heavy insider allocations are struggling to hold prices once trading begins. After repeated rounds of dilution and poor performance, retail investors appear far less willing to absorb early exits from private investors.
A shift toward fundamentals
Even with the numbers looking rough, the slowdown could end up doing some good. As VC influence drops, projects that already have users, revenue, and working products are the ones that still matter.
The market is slowly shifting away from hype launches and lopsided token allocations. Fundraising is no longer the main goal. Teams are being pushed to build products people actually use, and that can survive without relying on the next round of capital.
What this signals for crypto
The takeaway from the data is straightforward. Capital alone is no longer enough to carry token valuations. The market is moving away from reputation-driven launches and toward outcomes that can be measured on-chain and in revenue.
For an industry long driven by funding optics, the shift marks a significant change — and possibly a necessary one.
Also Read: BTC Supply in Profit Dips to 55%, Nearing the Historic Bottom Signal
