Crypto venture funding plunges as AI investment surges, reshaping industry dynamics

Crypto venture fundraising plummeted by 46% in February 2026 to $866 million amid a shift in investor focus towards artificial intelligence, signalling a significant change in industry risk appetite and funding trends.

Crypto venture fundraising slowed sharply in February 2026, with capital raised falling to $866 million as investors continued to shift towards artificial intelligence. Industry data cited by Crypto Briefing showed a 46% month-on-month drop in crypto fundraising, even as AI attracted $242 billion and accounted for four-fifths of global venture capital.

The wider picture suggests the pullback was not just about fewer deals but about a changing risk appetite. Research cited by RootData and republished by other market trackers said there were 62 publicly disclosed crypto VC rounds in the month, down 12.7% from January and 50% from a year earlier. DeFi remained the most active segment, while CeFi’s share was notably weaker.

That capital rotation matters for token markets. Crypto Briefing argued that if venture money keeps favouring AI over digital assets, the fully diluted valuations attached to new token launches may come under pressure. The report pointed to prediction markets on Polymarket, where traders were pricing a high probability that USD.AI would clear a $300 million FDV shortly after launch, a sign that expectations for AI-linked projects remain resilient even as broader crypto funding softens.

Still, not all data point in the same direction. One separate February market note said crypto and blockchain VC investment reached $2.3 billion, its strongest monthly tally since November 2022, with infrastructure and DeFi deals dominating and AI-crypto crossover rounds increasing. That contrast suggests the sector is becoming more concentrated, with fewer but larger deals, while speculative capital continues to migrate towards narratives seen as having clearer growth potential.

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Source: Noah Wire Services