Crypto venture capital funding experienced a significant decline in Q1 2026, with investments totaling approximately $4 billion across 355 deals, marking a 50% drop in capital and a 16% decrease in deal count from the previous quarter, according to Galaxy Digital. Despite the downturn, activity remained higher than during the 2023-2024 market slump. The decline was attributed to fewer large later-stage financings, while seed and early-stage rounds maintained a steady pace. The Trading/Exchange/Investing/Lending sector led in funding, securing $2.6 billion, while the U.S. dominated geographically, accounting for over 70% of invested capital. Median deal sizes hit record highs above $4.5 million, although valuations slightly decreased from Q4 2025 levels. Fundraising conditions remain challenging due to macroeconomic pressures and competition from other investment avenues.