The surge in artificial intelligence investment is drawing capital away from crypto startups, according to venture capitalists. Charles Chong, vice-president of strategy at BlockSpaceForce, highlighted that investors now have "real alternatives with faster revenue visibility," urging crypto teams to enhance their defensibility and monetization strategies. Despite these challenges, crypto startups raised $128 million in the first week of March, bringing the 2026 total to nearly $2.5 billion, as per DefiLlama data. Notable investments this week include ARQ's $70 million Series B round led by Sequoia Capital and Founders Fund, signaling confidence in its transition to a digital banking platform. Crossover Markets secured $31 million, with Tradeweb Markets leading the round, while QFEX raised $9.5 million in seed funding, focusing on tokenized real-world assets. These investments underscore ongoing interest in crypto infrastructure, despite the competitive landscape posed by AI advancements.