A prominent voice from the venture capital world is sounding the alarm about where the crypto industry is headed. Haseeb Qureshi, head of investment strategy at Dragonfly — the VC fund behind early bets on names like Bybit, Ethena, Polymarket, Avalanche, Monad, and MegaETH — believes the sector is entering a period of dangerous consolidation.
In a recent interview with CryptoBriefing, Qureshi argued that venture investment in crypto has been shrinking sharply over the last several quarters. The reasons, he says, are twofold: fewer genuinely new projects and startups worth backing, and a growing concentration of value and activity around a small number of dominant infrastructures. By 2030, he warns, the market could enter an entirely new phase — one that leaves far less room for new entrants to break through.
VC Investment in Crypto Is in Free Fall
This isn't a brand-new trend. Deal flow into crypto startups has been cooling steadily since the start of 2025, a marked shift from the exuberance of prior years.
According to data from The Block, the number of VC deals in crypto has now declined for six consecutive quarters. Q2 2026 closed with just 130 completed deals, compared to a peak of 718 in Q4 2024 — a striking collapse in activity in under two years.
Nearly every category within the industry has felt the pullback, with trading and brokerage platforms among the few segments still attracting meaningful — if modest — interest. Even DeFi, which saw a $3.6 billion investment boom as recently as Q4 2025, is now struggling to draw attention to new decentralized protocols.
That late-2025 DeFi surge, in fact, was largely driven by investor enthusiasm for prediction markets like Polymarket and Kalshi, which together pulled in more than $4.6 billion across various funding rounds — while countless other innovative projects were passed over. Strip out those two standouts, and the broader picture is one of steep decline, both in the number of deals and in the total capital flowing into the space.
Dragonfly Fears the Contraction Will Deepen Centralization
Qureshi believes the venture capital industry has entered what he calls its "final investment cycle." By 2030, he suggests, venture funds as we currently understand them could effectively disappear — starved of the winning bets needed to justify deploying fresh capital into early-stage startups.
The core issue, as he frames it, is that the crypto industry increasingly rewards scale: large platforms keep growing while smaller projects struggle to gain traction. The last two years bear this out — few genuinely new players have broken into the top tier, with Hyperliquid (notably, a project that raised no VC funding at all) and the prediction-market platforms mentioned above standing out as rare exceptions.
If this pattern continues, Qureshi warns, the industry risks becoming ever more dependent on a handful of dominant infrastructures. That doesn't necessarily mean Bitcoin, Ethereum, or stablecoins will stop growing — but it could mean that the value generated across the sector becomes concentrated in the hands of a shrinking number of ecosystems.
A parallel trend is already visible among centralized exchanges. Platforms that once existed simply to match buyers and sellers are steadily morphing into neobanks, brokers with ties to traditional financial markets, and all-in-one super-apps offering everything under a single roof. It's a far cry from the vision of decentralization the industry championed just a few years ago.
