“Arms Race” in a Bear Market: Why Have Six VC Firms Rushed to Raise Over $6 Billion?

Original by Odaily (@OdailyChina)

Author: Azuma (@azuma_eth)

The cryptocurrency bear market is persisting, but some highly signal-worthy moves are taking place in the primary market.

On May 4th, Haun Ventures, the venture capital firm founded by former US federal prosecutor Katie Haun, announced the closing of a $1 billion fundraising round. The funds will be split equally between early-stage and later-stage funds, each receiving $500 million. Over the next 2 to 3 years, they will primarily invest in crypto and blockchain startups, while also expanding into intersecting tracks such as AI Agents, fintech, and alternative assets.

Just one day later, a16z officially announced that its fifth crypto fund, Crypto Fund 5, had completed fundraising, securing $2.2 billion in committed capital. The fund will continue to deepen its focus on the cryptocurrency market, concentrating on parts of the cycle most often overlooked yet capable of generating the most long-term value, transforming next-generation infrastructure into products people use every day.

Looking further back in time, you'll find this isn't a coincidence, but rather a "collective consensus" among top-tier VCs.

In February this year, Dragonfly's Fund IV completed a $650 million raise. Late February saw multiple reports that Paradigm was seeking to raise up to $1.5 billion for its next fund. In March, ParaFi announced it had closed a $125 million fund. Later in April, sources revealed Blockchain Capital was raising $700 million for two funds... In under three months, these six VCs alone had quietly amassed over $6 billion in dry powder.

More crucially, this capital wasn't raised during the market's hottest period, but during a bear market marked by altcoin liquidity droughts, declining primary market valuations, and persistently low industry sentiment. As a16z partner Chris Dixon put it, "We are in a relatively quiet phase." This is not a victory lap driven by bull market euphoria, but a classic counter-cyclical deployment.

The Primary Market Moves Towards Divergence

Focusing solely on the $6 billion in fundraising can easily create the illusion of a "primary market recovery," but the reality is far more complex. Looking at the current state of top-tier VCs versus small and mid-sized VCs, the primary market is showing clear signs of divergence.

For most small and mid-sized VCs, this cycle has been far tougher than expected. Due to the persistent weakness of altcoins (missing out on much of the bull run) and tightening liquidity in the secondary market, exit channels have become severely blocked. Paper returns often shrink or even turn negative over the long unlock periods. Lower-than-expected ROI has directly led to declining LP confidence, making fundraising for new funds increasingly difficult.

Consequently, we see most small and mid-sized VCs are forced into a defensive contraction during the bear market: Some have chosen to reduce fund size and deal frequency; others have shifted to pure secondary market funds; still others have completely exited the market. Many small and mid-sized VCs with high visibility in the last bull run have now vanished from the market.

In stark contrast are the top-tier VCs that continue to raise aggressively. While their investment pace has slowed with the market downturn, their structural advantages are actually strengthening their dominant role in the primary market.

Regarding these structural advantages: First, top-tier VCs often possess stronger resource monopolization capabilities, allowing them to more effectively capture rare, high-quality projects (e.g., Kalshi's investors include a16z and Paradigm; Polymarket's include Dragonfly and ParaFi; Blockchain Capital invested in Coinbase and Circle). Second, top-tier VCs can cover a more complete investment cycle, from early pre-seed and seed stages to later A and B rounds, offering more opportunities to top up or amplify returns. Third, top-tier VCs have greater room for error; larger AUM means they can tolerate relatively higher failure rates and bet on longer-term narratives. Fourth, the brand effect of top-tier VCs gives them stronger bargaining power, often securing better terms than small and mid-sized VCs even in the same funding round.

These structural advantages and disadvantages ultimately lead to market divergence, with the Matthew Effect becoming increasingly pronounced. In a bull market, small and mid-sized VCs can still achieve breakout success with a few lottery-like bets. But during a bear market cycle, this trend only intensifies.

What is This $6 Billion Looking At?

According to disclosures from these six VCs, the newly raised $6 billion will be allocated to the following tracks and directions.

• Dragonfly: Bullish on the trend of crypto-financialization, highlighting stablecoins, prediction markets, agent payments, on-chain privacy, and real-world asset tokenization.
• Paradigm: Expanding beyond crypto into AI, robotics, and other frontier technology fields.
• ParaFi: Stablecoins, asset tokenization, institutional-grade on-chain financial products.
• Blockchain Capital: Focused on early and growth-stage crypto startups.
• Haun Ventures: Bullish on next-generation financial infrastructure, including stablecoins, asset tokenization, prediction markets, and the agent economy.
• a16z: Mentioned financial infrastructure like stablecoins, DeFi, prediction markets, and asset tokenization, while believing that in the age of the AI explosion, the inherent properties of crypto networks can still solve transparency and verifiability issues in software.

When comparing the public statements of these six VCs, while there are still some differences in emphasis, there is a clear overall convergence.

The most core consensus is undoubtedly on the next-generation on-chain financial infrastructure represented by stablecoins, asset tokenization (RWA), prediction markets, and on-chain payments. Whether it’s Haun Ventures, a16z, Dragonfly, or ParaFi, these keywords are repeatedly mentioned in their new fund directions. To some extent, this also signals a shift in the investment logic of the crypto industry. Compared to the sentiment-driven moves of the previous cycle, this cycle's top-tier VCs place greater value on infrastructure projects that have already initially validated real demand and have the potential to absorb traditional financial flows over the long term.

Beyond that, top-tier VCs are also significantly increasing their AI-related allocations. Paradigm has explicitly stated it will allocate some funds to AI and robotics, while Haun Ventures and Dragonfly have also mentioned agent-related directions. The reason behind this trend is not complicated. On one hand, AI has become the most certain major theme in the global tech industry, and top VCs cannot afford to be absent. On the other hand, the crypto industry is trying to prove it is not just an outdated narrative marginalized by the AI hype, but can become part of the underlying infrastructure for the AI era — especially as the agent economy begins to rise, the inherent openness, composability, and permissionless nature of crypto networks are starting to regain value.

Raising in a Bear Market is Essentially Betting on the Next Cycle

For VCs, bear markets are often the periods that truly determine future landscape.

While capital is easiest to raise in a bull market, project valuations and entry barriers are often much higher. Only when market sentiment is low, liquidity is scarce, and industry narratives break down, are VCs' opportunities to capture excess returns through judgment truly magnified.

Looking back at past cycles, bear markets don't kill truly high-quality projects; instead, they accelerate market cleansing, causing "gold to shine faster." This is why, even as market sentiment remains low, top-tier VCs continue to raise aggressively in a counter-cyclical manner.

Because what they are truly betting on is never the "present," but rather who will become the next Circle, the next Hyperliquid, or the next Polymarket once the next cycle begins.