“The blockchain project as we know it is dead,” said Gil Rosenco-founder of Funds for blockchain builders. “Narrative, community building and token pumping projects have not been sustainable and many Binance Alpha projects have struggled. With AI and metals being high growth and speculative, many players have also left the market.”
Money flow is stable, but not quite dead.
Venture capital firms have invested around $8 billion in crypto and blockchain-related companies, the largest investment since 2022, said Alex Thornhead of research at Galaxy. Galaxy has become a go-to hub for investors looking for market trends.
The number of transactions is still lower than in 2022, Thorn wrote in a report dated February 3, predicting difficult times ahead for fund managers looking for new ideas. Bitcoin’s losses could slow investments in blockchain and crypto projects once the first quarter ends, Thorn wrote.
Traditional finance takes over
Blockchain is not disappearing as a technology. It is increasingly adopted (see Ripple and Japan’s SBI Holdings) and has gained popularity in stablecoins, yield products, and traditional finance is enticed by the tokenization of real-world assets.
At the World Economic Forum in January, the founder of BlackRock Larry Fink stuck to his “tokenization is necessary” theme, something he first addressed in 2022. Fink believes the future of financial infrastructure will be built on a blockchain – essentially connecting traditional assets with on-chain tokens.
Tokenization records ownership of assets on digital ledgers, allowing stocks, bonds, real estate, and even commodities to exist as digital records that can be traded and settled without traditional intermediaries.
The technological infrastructure required to build this world is one of the niche segments favored by investors.
Still, the adoption of blockchain by traditional fintechs like Western Union, Paypal, Remitly and Stripe has led to an increase in fintech funds investing in blockchain again, said Rosen of the Blockchain Builders Fund.
According to Messari, the second week of February saw 18 projects raise $62 million led by Inference Research ($20 million raised). Inference was designed to capitalize on the convergence of digital assets and traditional finance, of course powered by AI.
“Based on what we’re seeing in conversations with global investors, capital in 2026 is moving toward infrastructure that can support real, on-chain economic activity. The speculative cycle has cooled and VCs are prioritizing projects related to real-world assets, sustainable return and compliance,” said Wish WuCEO and co-founder of Pharos.
Their $10 million Pharos Builder incubator, backed by companies like Hack VC, Draper Dragon, Lightspeed FactionAnd Centrifugeis seeing demand from founders creating integrations of real-world assets with high-performance financial applications.
“What stands out to investors this year is technical depth, capital efficiency and a clear path to market,” Wu said.
Private investors want domain expertise, technical expertise, a decent business network and a clear path to commercialization.
“Projects that create real value with revenue streams are sustainable,” Rosen said. “Those that are based on speculation or pure infrastructure in the hope that someone will build a project on it are not.”
Stablecoins, tokenized assets, and compliance-ready infrastructure are replacing token hype and social media narratives about “token drops.” The players may be gone, but real money still needs to be found.
The author of this article is a Bitcoin investor. Work created by the author.
Benzinga Disclaimer: This article comes from an external, unpaid contributor. It does not represent reporting by Benzinga and has not been edited for content or accuracy.
