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Happy Wednesday,
This is your institutional newsletter, Crypto Long & Short. This week:
- Later-stage deals took 57% of crypto venture capital last quarter. Varun Datta of Truth Ventures argues the crowd is paying up for the wrong kind of safety.
- Top headlines institutions should pay attention to by Francisco Rodrigues
- “Robinhood chain daily DEX volume crosses $1 billion” in Chart of the Week
Thanks for joining us!
Crypto VCs are mistaking consensus for discipline
By Varun Datta, venture capitalist and CEO of Truth Ventures
Venture capital likes to view itself as a risk-taking sector. The pitch decks and panel talks all convey identical messages: we spot visionary founders early, support unproven ideas, and tolerate uncertainty long enough for it to yield results. At least, that is how the community depicts itself.
Yet, the figures tell a different story.
As reported by Galaxy Research’s Q1 2026 crypto venture capital report, investors distributed roughly $1.1 billion among only eight fresh crypto venture funds, marking the lowest quarterly fund quantity since the third quarter of 2020. Later-stage enterprises attracted 57% of all money deployed during that quarter, whereas pre-seed transactions accounted for just 19% of finalized deals.
Money has not vanished; it has merely migrated toward larger checks for a smaller number of enterprises, typically those already capable of proving product-market fit. What is marketed as prudence increasingly resembles a retreat from the very seed stage that venture capital was established to support.
This presents a dilemma for the venture capital industry, but it simultaneously presents an opening for investors prepared to deviate from the herd.
When funds wait for traction, an established category, and someone else’s term sheet to validate a startup, they might diminish uncertainty, but they also incur a steeper cost and vie with every other backer pursuing the identical narrow pool of validated businesses. That is not contrarian investing. That is a consensus play.
Many innovations that defined crypto’s preceding cycle did not appear inevitable when they initially secured funding. Layer-2 networks, DeFi protocols, and foundational developer utilities were backed before their respective markets were formalized. Investors prepared to commit during those quieter phases secured value that vanished as soon as the opportunity became obvious.
An analogous window might be opening at present. Seed-stage capital is limited and sentiment remains cautious while AI has absorbed an increasing portion of investor interest. OECD analysis found that AI companies attracted 61% of global venture capital investment in 2025. Nevertheless, crypto founders are still constructing the infrastructure necessary for digital finance to reach mass audiences.
Investors should utilize this window to search for three specific elements:
First, evidence of a real problem rather than an attachment to a fashionable narrative. The most robust infrastructure firms typically launch by resolving an unglamorous friction point surrounding payments, liquidity, interoperability, compliance, or developer experience.
Second, early indicators of genuine demand. At the founding phase, this might not translate to substantial revenue. It can manifest as developers consistently utilizing a tool, clients participating in product creation, or users returning without token incentives.
Third, a framework capable of enduring shifting market cycles. Sustainable economics, disciplined token design, and a transparent pathway to distribution are far more critical than growth generated through short-term subsidies.
This does not imply discarding due diligence or backing every single early-stage concept. It signifies acknowledging that eliminating uncertainty also erodes much of the potential upside. The function of venture capital is not to wait until risk dissipates—quite the contrary. It is to discern which risks are worth absorbing.
The existing financing deficit provides investors access to promising teams at more realistic valuations alongside reduced competition. Those who wait for the next market narrative to confirm where value is being generated will arrive alongside everyone else, and pay accordingly.
The takeaway is straightforward: stop treating consensus as proof. The next generation of crypto infrastructure is being constructed right now, and the investors who establish conviction before traction becomes unmistakable will be best situated to reap the rewards.
Chart of the Week
Robinhood chain daily DEX volume crosses $1 billion
Robinhood chain attained a record daily DEX volume of $1.49 billion on August 31—climbing roughly 474% since the beginning of August. CASHCAT, a premier token on the network, rose approximately 373% during that identical timeframe, moving from about $0.041 to about $0.193.
Looking for more? Receive the latest crypto news from coindesk.com and market updates from coindesk.com/institutions.
Anvil: The Missing Collateral Layer
Anvil is a shared on-chain collateral layer built on a programmable letter of credit: reserve assets as a guarantee -no loan, no interest, keep custody & yield.
Why it matters:
Anvil is a shared on-chain collateral layer built on a programmable letter of credit: reserve assets as a guarantee -no loan, no interest, keep custody & yield.
Originally published at https://www.coindesk.com/coindesk-indices/2026/09/02/crypto-long-and-short-crypto-vcs-are-mistaking-consensus-for-discipline.
