Crypto Startups Raise Nearly $5 Billion in Funding Amid Shift to Practical Sectors

Crypto startups have seen a significant amount of funding in the first quarter of 2026, with nearly $5 billion raised. According to data from DefiLlama, this represents a year-on-year decrease of 16%. Despite this decline, the investment ecosystem continues to evolve.

Capital is flowing away from speculative tokens and towards more practical sectors such as payments and trading infrastructure. The prediction market sector has emerged as a leader in this trend, attracting over $1.7 billion in investments. Payment and trading infrastructure also saw significant funding, with $735 million and $423 million respectively.

Top non-crypto institutions are accelerating their entry into the space. This includes investment firms such as Sequoia Capital, Founders Fund, Bain Capital, and Alibaba. The top 10 fundraising projects in Q1 include Kalshi, Polymarket, Rain, BitGo, Flying Tulip, and Whop.