When the mainstream financial world started embracing cryptocurrency, it created a digital revolutionary force that has been prevalent in the past decade and continues to do so.
Since 2009, digital currencies have grown exponentially in both adoption and market value. Powered by the blockchain, these decentralized assets promise transparency, security, and the potential for financial inclusion on a global scale.
Traditionally, venture capital (VC) funding has been the lifeblood of startups, providing the necessary financial support and strategic guidance to help nascent companies grow. Venture capitalists typically invest in early-stage companies in exchange for equity, aiming for significant returns as these companies succeed. However, this process is often lengthy, complex, and accessible primarily to those within established financial networks.
Cryptocurrency is now transforming this landscape, offering new, innovative ways for startups to raise capital. We will explore how cryptocurrency is reshaping venture capital funding, the benefits and challenges it brings, and what the future holds for this dynamic intersection of finance and technology.
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The Rise of Crypto Capital
Initial Coin Offerings (ICOs)
One of the most significant developments in crypto capital has been the advent of Initial Coin Offerings (ICOs). An ICO is a fundraising method where startups issue their own cryptocurrency tokens in exchange for established cryptocurrencies like Bitcoin or Ethereum. This approach allows companies to bypass traditional financial intermediaries, accessing capital directly from a global pool of investors.
The popularity of ICOs peaked around 2017 and 2018, with numerous startups raising substantial funds quickly. This method democratized access to investment opportunities, enabling a wider range of participants to support innovative projects. One example is Tim Draper, a rich and well-known crypto enthusiast that backed several ICOs (Tezos and Bancor). However, it is not a fairy-tale world and the lack of regulation and oversight led to several high-profile scams and failures, highlighting the need for more robust frameworks and some regulation.
Security Token Offerings (STOs) and Initial Exchange Offerings (IEOs)
In response to the challenges faced by ICOs, newer methods such as Security Token Offerings (STOs) and Initial Exchange Offerings (IEOs) have emerged. STOs involve the issuance of tokens that are backed by real-world assets and comply with existing securities regulations, providing more security and legitimacy to investors. IEOs, on the other hand, are conducted through the most trusted central exchanges for Bitcoin and other cryptocurrencies, offering a more controlled and secure fundraising environment. These exchanges vet projects before listing their tokens, adding an extra layer of credibility and protection for investors.
These developments in crypto capital illustrate a shift towards more regulated and secure methods of fundraising, balancing innovation with investor protection.
Benefits of Crypto Funding for Startups
Accessibility and Inclusivity
Crypto funding democratizes investment, allowing global participation beyond traditional venture capital constraints. Startups can attract a diverse range of investors, including those typically excluded from financial markets.
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Speed and Efficiency
Crypto funding processes, such as ICOs, STOs, and IEOs, are much faster than traditional VC rounds, enabling startups to quickly secure capital and accelerate their growth without lengthy delays.
Liquidity and Tokenization
Tokenizing assets via blockchain offers immediate liquidity and fractional ownership. This allows investors to trade tokens on exchanges and access high-value projects, providing flexibility and early exit opportunities.
Challenges and Risks
Regulatory Uncertainty
The regulatory environment for cryptocurrencies is inconsistent, with some regions embracing them and others imposing strict regulations. Startups must navigate these complexities carefully to ensure compliance.
Security and Fraud
The decentralized nature of cryptocurrencies can lead to security vulnerabilities and fraud. Startups need robust security measures and transparent practices to protect investors and build trust.
Market Volatility
Cryptocurrencies are highly volatile, posing risks for startups dependent on crypto capital. Effective financial planning and converting to stable assets can help manage this volatility.
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Case Studies
Successful Crypto-Funded Startups
Several startups have successfully leveraged crypto capital to fuel their growth and innovation. One notable example is Filecoin, a decentralized storage network that raised over $250 million through an ICO in 2017. Filecoin’s innovative approach to data storage and its use of blockchain technology attracted significant interest from the crypto community, enabling it to secure substantial funding quickly.
Another success story is EOS, a blockchain platform for decentralized applications (dApps). EOS raised a staggering $4 billion through a year-long ICO, making it one of the most successful crypto fundraising campaigns to date. The funds have been instrumental in the development and scaling of the EOS platform, which aims to provide high-performance and scalable solutions for dApp developers.
Lessons Learned
These case studies offer valuable lessons for other startups considering crypto funding. Firstly, having a clear, compelling vision and a well-defined use case for blockchain technology can attract significant interest and investment. Transparency and strong communication with potential investors are also crucial in building trust and credibility. Moreover, navigating the regulatory landscape effectively and ensuring compliance can help mitigate legal risks and enhance the legitimacy of the fundraising efforts.
By examining these success stories, other startups can glean insights into best practices and strategies for leveraging crypto capital to achieve their business objectives.
The Future of Venture Capital and Cryptocurrency
Integration of Crypto in Traditional VC
Traditional venture capital firms are increasingly recognizing the potential of cryptocurrency and blockchain technology. Some are integrating these technologies into their investment strategies and portfolios. By participating in ICOs, STOs, and IEOs, traditional VCs can diversify their investments and gain exposure to innovative blockchain projects. Additionally, many VCs are exploring hybrid models that combine traditional equity investments with token-based fundraising, offering a new blend of financing options for startups.
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Predictions and Trends
The intersection of venture capital and cryptocurrency is poised to evolve further, driven by technological advancements and regulatory developments. One major trend is the growing adoption of decentralized finance (DeFi) platforms, which leverage blockchain technology to offer financial services without intermediaries. These platforms are creating new opportunities for startups to raise capital and for investors to access a broader range of investment options.
Another significant trend is the increasing tokenization of real-world assets, such as real estate, art, and commodities. This trend is expanding the scope of crypto capital beyond purely digital assets, enabling startups to attract investments from a wider audience. Furthermore, as regulatory frameworks mature, we can expect greater clarity and security for both startups and investors, fostering a more stable and trustworthy environment for crypto fundraising.
The integration of blockchain technology into various industries is likely to drive further innovation and investment, reshaping the venture capital landscape. As more traditional financial institutions embrace cryptocurrency, the lines between traditional and crypto funding will continue to blur, creating a more dynamic and inclusive ecosystem for startups.
Conclusion
Cryptocurrency is undeniably transforming the landscape of venture capital funding. From ICOs to regulated methods like STOs and IEOs, crypto capital offers startups innovative ways to raise funds with greater accessibility, speed, and liquidity.
However, this frontier comes with challenges such as regulatory uncertainty, security concerns, and market volatility. Learning from successful crypto-funded startups can provide valuable insights for others.
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As traditional VC firms increasingly adopt cryptocurrency and blockchain technology, and as regulatory frameworks evolve, the future of venture capital will become more dynamic and inclusive. The convergence of traditional and crypto funding models will open new opportunities and reshape the financial landscape.
Ultimately,while the path of crypto capital is still developing, its potential to revolutionize venture capital funding is evident. Startups and investors must stay informed, adaptable, and vigilant in navigating this complex terrain.
Ethereum isn’t being recognized for the improvements it’s making.
Most assets simply can’t reinvent themselves every few quarters, but Ethereum(ETH +4.21%) arguably does just that. After pushing two major upgrades, Pectra and Fusaka, in 2025, the chain has another two big improvements on the docket for 2026.
Nonetheless, the coin’s price is down by 38% during the past three months alone, largely for macro reasons that are well beyond its control. Thus it’s likely undervalued, and potentially by quite a lot. Does that make it a screaming buy with a hearty investment of $5,000?
Image source: Getty Images.
The upgrade pipeline is solid, but it can’t guarantee returns
Ethereum’s 2025 upgrades were a lot more than cosmetic improvements, and they laid the technical groundwork for a lot of the follow-on work that’s going to happen this year. This stuff might sound boring (and it might actually be) but knowing what’s going on with it is key to appreciating the chain’s place in the crypto sector’s competitive landscape, not to mention its future opportunities for growth.
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The Pectra upgrade went live in May 2025, and it bundled changes aimed at providing better wallet UX, more efficient staking, and more throughput for Layer-2 (L2) chains. Fusaka followed on Dec. 3, and its headline feature, peer-to-peer data availability sampling (PeerDAS) is also a game changer for the chain’s ability to provide rapid performance at scale, and substantially cheaper than before. Today, the chain’s average transaction fees are roughly 75% lower than three years ago, with an average token swap now costing about $0.30, so these successive upgrades are definitely succeeding in making Ethereum a cheaper and easier technology to use.
Today’s Change
(4.21%) $85.83
Current Price
$2123.98
Key Data Points
Market Cap
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$256B
Day’s Range
$2014.22 – $2136.13
52wk Range
$1398.62 – $4946.05
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Volume
32B
For 2026, the next upgrade, Glamsterdam, will build on those past successes while also adding new censorship resistance features. But, if the coin’s price performance after past updates is any indication, investors simply can’t count on a boost.
There’s no rush to buy it
There’s not exactly a rush to buy Ethereum before Glamsterdam drops.
Ethereum’s upside comes from being the settlement layer that L2s and on-chain finance route through. Given that its upgrades tend to reduce transaction costs rather than increase them, the coin’s value capture from the traffic it supports is still very weak, and it would likely take a deluge of new traffic to move the needle for investors. Realistically, the new traffic will probably ramp up slowly over time, assuming it arrives at all, so buying the coin means getting exposure both to the value generated from the improvement of its underlying tech and also the value generated from people using it to pay for decentralized finance (DeFi) apps and services.
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But it’s still very much an asset worth owning, as it’s one of the most important in the crypto sector. An investment of $5,000 buys roughly 2.5 coins, which is enough exposure in case 2026’s development road map plays out such that the coin’s price significantly rises, which is still possible.
Of course, if you’re usually intolerant of risk, it’s probably better to aim for a much smaller allocation.
Artificial intelligence is starting to do things that were formerly the exclusive domain of humans, including tasks like holding and moving money. If the “agentic AI” trend sticks, it’s thus reasonable to assume that more financial activity will be initiated by software, and, perhaps even for the benefit of that software rather than for the benefit of humans.
That brings up a fun, slightly unsettling question for investors: Could Bitcoin(BTC 1.03%) benefit by becoming a preferred store of value for AI agents?
Image source: Getty Images.
What AI agents will actually optimize for
In practice, the AI agents of today don’t have any need for money in the sense that a human might. They’re machines designed to identify market patterns, assist with payment routing, manage liquidity in key accounts, and monitor fraud risk.
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That set of jobs implies handling a very particular kind of money. In short, for an AI agent to excel at those tasks, it needs to operate within a system with low, stable costs and clear integration points for basic functionalities like identity verification and trade authorization. If those requirements aren’t met, the agent can’t do much of anything because the company or individual running it will be loath to eat the operational costs and regulatory risks associated with letting it continue, even if it’s possible to do so.
Today’s Change
(-1.03%) $-721.23
Current Price
$69220.00
Key Data Points
Market Cap
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$1.4T
Day’s Range
$67656.00 – $71487.00
52wk Range
$60255.56 – $126079.89
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Volume
67B
So even if AI agents become a real theme in the world of managing investments and making trades — and they probably will — the initial wave of agent activity will probably concentrate in quite narrow and controlled workflows rather than a sudden, industrywide automation of everything. And there simply aren’t many ways for AI to change or improve upon the Bitcoin mining process either.
Therefore, we should not expect AI agents to immediately cause noticeable changes in Bitcoin’s price, as they might not.
Where Bitcoin could see upside
The best case for Bitcoin here is not that it becomes a spendable asset for agents. It’s simply a bad fit for that purpose; it’s slow and expensive to use, and it lacks any smart contract infrastructure for automated systems to hook into gracefully. Nonetheless, Bitcoin could still gain a lot from the rise of AI if it becomes the reserve store of value that agents use to invest their earnings, assuming they ever have any.
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It’s a decent choice for that purpose because it has a fixed supply schedule and a governance culture that makes major changes slow and contentious, both of which are good features for those seeking a long-lived store of value that doesn’t require a human to handle. Of course, there are other cryptocurrencies that could fill that same role, though none are as widely trusted as Bitcoin.
So, what should investors watch for if they want to see whether the AI upside in Bitcoin is actually going to play out as described here?
Look for financial institutions building agent-ready Bitcoin custody solutions with policy controls, and for large financial businesses explicitly describing Bitcoin as a strategic reserve asset inside their AI-driven operations.
Until those hints appear, it’s a lot more reasonable to treat AI as a modest tailwind for Bitcoin.
Hyperliquid is up 30% to start the year, buoyed by the imminent launch of new products for crypto traders.
Of the top 20 cryptocurrencies in the world, only a handful are in positive territory for the year. Market bellwethers Bitcoin(BTC +3.95%) and Ethereum(ETH +6.41%) are down more than 15% each, and more speculative altcoins are down as much as 25%.
But amid this market mayhem, there’s one cryptocurrency that has managed to soar in value by 30% to start the year: Hyperliquid(HYPE 4.74%). If the hype about HYPE is right, this cryptocurrency could soar 80% or higher in 2026.
The hype about HYPE
Last year, Hyperliquid exploded in popularity, amid all the hoopla about crypto perpetual futures (“perps”). Hyperliquid has quickly become one of the top decentralized exchanges for trading crypto perpetual futures, and trading volume has thus far been through the roof. This is a product with immense appeal for risk-seeking crypto investors: It enables them to bet on the future price of a cryptocurrency, with no fixed expiration date and maximal leverage.
Today’s Change
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(-4.74%) $-1.63
Current Price
$32.73
Key Data Points
Market Cap
$7.8B
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Day’s Range
$31.59 – $34.67
52wk Range
$9.42 – $59.30
Volume
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726M
After launching at a price of $3 in November 2024, Hyperliquid eventually hit a high of $59 in September 2025. But since then, it has collapsed in price, and is currently trading for just $33 as I write this.
That’s why I think Hyperliquid could see a rally of 80% or higher in 2026. The market is just now waking up to the fact that HYPE is badly undervalued. A rally of 80% would bring it back to its price of $59 from just a few months ago.
The big catalyst for Hyperliquid in 2026
There’s one big new potential catalyst for HYPE in 2026, and that’s the imminent arrival of new “outcome contracts” for the Hyperliquid trading platform, as well as new products for options traders.
These “outcome contracts” are a hybrid of prediction market contracts and financial derivatives, in which the final outcome is binary (i.e., yes or no). If they’re a hit with investors, they could propel Hyperliquid to even higher trading volumes and even greater popularity.
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Image source: Getty Images.
Some have suggested that the Hyperliquid platform might even begin to woo away traders who might have otherwise used a platform such as Kalshi or Polymarket to make a prediction about the future price of a cryptocurrency. If that’s the case, Hyperliquid might go on to set another all-time high in 2026.
Lessons from the 2022 crypto collapse
Of course, any march higher by Hyperliquid is going to be complicated if cryptocurrency behemoths Bitcoin and Ethereum can’t get things rolling again. But it’s not impossible.
As a point of reference, I looked at returns from 2022, when the entire crypto market cratered in value. Bitcoin fell by 64% and Ethereum fell by 68%. Some altcoins lost as much as 95% of their value.
But a few names managed to shine, including GMX, a decentralized cryptocurrency exchange allowing users to trade with high leverage. Today, GMX is a forgotten crypto with a tiny $60 million market cap. But in 2022, it managed to deliver returns of 111% to investors, making it one of the top-performing cryptocurrencies of the year.
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All of which leads me to think: 2026 could end up being the year of Hyperliquid. If HYPE is the new GMX, it could nearly double in value this year.
