"Arms Race" in the Bear Market: Why Have Six VCs Raised Over $6 Billion?

Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

The crypto bear market continues, but several highly significant moves have already emerged in the primary market.

On May 4th, Haun Ventures, a venture capital firm founded by former U.S. federal prosecutor Katie Haun, announced the closing of a $1 billion fundraise. The fund will be split evenly, with $500 million allocated to early-stage and $500 million to later-stage investments. Over the next two to three years, the firm will primarily invest in cryptocurrency and blockchain startups, while also expanding into adjacent sectors like 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 focus on the cryptocurrency market, targeting segments often overlooked during market cycles but with the highest potential for long-term value creation, aiming to convert next-generation infrastructure into products people use every day.

If we rewind the timeline further, we find this is not a coincidence but rather a "collective consensus" among top venture capital firms.

In February this year, Dragonfly closed its Fund IV with $650 million. Later that month, multiple media outlets reported that Paradigm was seeking to raise up to $1.5 billion for its next fund. In March, ParaFi announced it had completed a $125 million fundraise. In late April, sources revealed that Blockchain Capital was raising $700 million for two funds... Within less than three months, these six VC firms alone had quietly amassed over $6 billion in dry powder.

More importantly, this capital was not raised during the market's peak, but during a bear market phase characterized by the liquidity drain of altcoins, declining valuations in the primary market, and persistently low industry sentiment. As a16z partner Chris Dixon stated, "We're in a relatively quiet period." This is not a rally driven by bullish sentiment, but a textbook example of counter-cyclical positioning.

The Primary Market is Moving Towards Divergence

Focusing solely on the $6 billion figure in fundraises can easily create the illusion that "the primary market is warming up," but the reality is far more complex. Looking at the survival status of top-tier vs. small and mid-tier VC firms, the primary market is exhibiting a clear trend of divergence.

For most small and mid-tier VCs, this cycle has proven much harder than expected. The persistent weakness of altcoins (largely missing the entire bull run), coupled with tightening liquidity in the secondary market, has severely hampered exit channels. Paper gains often shrink or turn negative over lengthy unlocking periods. Lower-than-expected returns on investment have directly led to declining LP confidence, making it increasingly difficult to raise new funds.

Consequently, we are seeing most small and mid-tier VCs being forced into a passive contraction during this bear market: Some have chosen to reduce fund sizes and decrease deal frequency, some have shifted to pure secondary market funds, and others have simply exited the market entirely. Many small and mid-tier VCs that were highly visible during the last bull run have now vanished from the scene.

In stark contrast are the top-tier VCs still aggressively raising capital. While their investment pace has also slowed with the market downturn, their dominant role in the primary market is actually strengthening due to their structural advantages.

As for these structural advantages: Firstly, top-tier VCs often possess stronger resource monopolization capabilities, allowing them to more effectively capture rare, high-quality projects (e.g., Kalshi is backed by a16z and Paradigm, Polymarket by Dragonfly and ParaFi, and Blockchain Capital has invested in Coinbase and Circle); Secondly, they can cover a more complete investment cycle, from early pre-seed and seed stages to later Series A and B rounds, providing more windows for doubling down or capturing upside; Thirdly, they have a larger margin for error, with larger AUM allowing them to tolerate higher failure rates and bet on longer-term narratives; Fourthly, their brand power translates into stronger bargaining power, often allowing them to secure better terms than small and mid-tier VCs even in the same funding round.

This structural disparity in advantages and disadvantages ultimately leads to market divergence, with the Matthew effect becoming increasingly prominent. In a bull market, small and mid-tier VCs can still achieve success through a few lottery-like bets, but within a bear market cycle, this divergence trend will only intensify.

What is the $6 Billion Looking At?

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

• Dragonfly: Bullish on the trend of crypto financialization, highlighting stablecoins, prediction markets, Agent payments, on-chain privacy, and Real World Asset (RWA) tokenization.
• Paradigm: In addition to crypto, expanding into AI, robotics, and other advanced technology frontiers.
• ParaFi: Stablecoins, asset tokenization, and institutional-grade on-chain financial products.
• Blockchain Capital: Focus on early and growth-stage crypto startups.
• Haun Ventures: Bullish on the next generation of financial infrastructure, including stablecoins, asset tokenization, and prediction markets, as well as the Agent economy.
• a16z: Mentions stablecoins, DeFi, prediction markets, and asset tokenization as financial infrastructure, while also believing that in the age of the AI explosion, the inherent properties of crypto networks can still be used to address software transparency and verifiability issues.

Looking at the public statements of all six VCs together, while there are still some differences in emphasis, there is a clear overall convergence.

The most core consensus undoubtedly revolves around the next-generation on-chain financial infrastructure represented by stablecoins, Real World Asset (RWA) tokenization, 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 signals a shift in the investment logic of the crypto industry. Compared to the emotionally-driven deals of the last cycle, this cycle, top-tier VCs are placing greater value on infrastructure-type projects that have already demonstrated preliminary real-world demand and have the potential to capture traditional financial flows over the long term.

Beyond this, top-tier VCs are also significantly increasing their AI-related allocations. Paradigm has explicitly stated it will allocate some capital to AI and robotics, while Haun Ventures and Dragonfly have also mentioned Agent-related fields. The reason behind this trend is not complicated. On one hand, AI has become the most deterministic 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 that it is not just an old narrative marginalized by the AI wave, but can serve as a foundational layer for the AI era — especially as the Agent economy gradually rises, the inherent openness, composability, and permissionless nature of crypto networks are beginning to regain their value.

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

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

While capital is easiest to raise in a bull market, project valuations and entry barriers are often higher. Only when market sentiment is low, liquidity is drained, and industry narratives fail do opportunities for VCs to capture excess returns through judgment become truly amplified.

Looking back at past cycles, bear markets do not kill truly high-quality projects; instead, they accelerate the market's cleansing process, allowing "gold to shine faster." This is precisely why, even with current market sentiment still subdued, top-tier VCs are aggressively raising capital counter-cyclically.

Because the bet they are placing is never on "the present," but on who will become the next Circle, the next Hyperliquid, the next Polymarket once the next cycle begins.