On February 9, following sharp declines in crypto asset prices and a wave of market consolidations, industry observers noted that the speculative Web3 boom had accelerated growth but failed to produce sustainable, revenue-generating business models.Native crypto funds are now gradually returning to traditional startup logic, emphasizing product-market fit, profitability, and long-term user retention.
Retail Enthusiasm Dwindles, Investment Focus Shifts
Despite White House policies supporting crypto and a relatively lenient regulatory environment, token-driven speculative cycles have faded. Funds are now targeting more resilient areas, including:
- Stablecoin infrastructure
- On-chain prediction markets
- Additionally, some funds are expanding into FinTech and AI.
- Santiago Roel Santos (CEO, Inversion) commented:
“The market is consolidating around things that actually work. Most of Web3 currently has no real investment value. NFTs, gaming, and uninspired DeFi platforms are no longer in focus.”
Native Crypto Funds Pivot to Deep Tech
Funds such as Mechanism Capital and Tangent have begun investing in robotics startups like Apptronik and FinTech company Figure, signaling a shift away from core crypto domains.
Previously high-risk investments—NFTs, Web3 social platforms, and blockchain games—are gradually being phased out. Now, revenue, user retention, and willingness to pay are key early-stage metrics, replacing reliance on narrative hype or token liquidity.
Catrina Wang (Partner, Portal Ventures) notes that this trend is pushing native crypto VC toward FinTech and AI.Tom Schmidt (Partner, Dragonfly) adds:
“I wouldn’t be surprised to see more funds close or downsize. They face intense competition from traditional VCs in Web 2.5 sectors.”
Industry Insight
Current market consolidation demonstrates that crypto investment is moving from speculation to value-driven, sustainable models. Future investors should prioritize real revenue streams, user engagement, and business viability, rather than relying solely on narratives or token market sentiment.