How Venture Capitalists Are Destroying the Long-Term Future of Crypto

The crypto market is showing signs of improvement, with the total market cap recently surpassing $3 trillion. This recovery suggests growing confidence among investors.

However, the grim reality is that just as many tokens listed this year have also died due to a lack of sustainable growth methods.

Venture Capitalists To The Blame?

The Venture Capitalists are essentially killing the crypto space as they opt to fund new and emerging crypto products just for the sake of making profits off of them. While this may not seem immediately harmful, it impacts the industry’s long-term viability. David Phelps of JokerRace explained how VCs operate in crypto:

“Normally, VC money comes from the top for a few years while companies work to get it from the bottom long term… but in crypto, that hasn’t happened. Companies have taken money from the top, used it to mint a token at VC-level valuations, then worked to bolster token price—with their own tokens (sic),” Phelps tweeted.

However, with market conditions worsening, VCs began pulling back, and crypto projects are feeling the repercussions. A recent Coingecko research report revealed that over 1.82 million cryptocurrencies failed in 2025 alone, while approximately 1.93 million were successfully listed. This marks a significant increase from 2024, when only 1.38 million tokens failed, and it’s alarming given that 2025 is only halfway through.

Crypto Tokens Listed vs Dead. Source: Coingecko

The rising number of failures highlights a shift in vision within the industry. What started as a financial revolution has morphed into a gamble for quick profits. This shift has compromised the original purpose of cryptocurrency.

In an interview with BeInCrypto, Hank Huang, CEO at Kronos Research, discussed how crypto projects can differentiate themselves from scams and take a stronger stand:

“Starting with a smaller market cap captures investors’ attention, showing that price and market cap aren’t artificially inflated. By focusing on achievable yet exciting milestones, building strategic partnerships, and providing a clear roadmap, confidence is built. With the DAO model in place, the community is empowered to make key decisions, whether it’s choosing between product development or deciding which utility use case to prioritize. This approach fosters real engagement and also shows that we’re building together, creating long-term value through collective input and collaboration,” Huang stated.

Finding A Way Through

One of the key reasons for token and project failures is a lack of focus on revenue. Many VC-driven projects operate on free money, offering free services until the funds run out. This creates an environment where investors are hesitant to pay for similar services, even if the alternatives are more sustainable.

The question arises: How can crypto companies pivot to create business models grounded in real value and user-driven revenue instead of relying on token price manipulation and VC-driven hype? According to Huang, the answer lies with the companies themselves:

“Crypto projects should start with a smaller, more manageable market cap, avoiding the inflated valuations driven by short-term hype. The focus must shift from token price incentives to real revenue models, through fees, services, or user-driven growth. With a clear, attainable roadmap, projects can build slowly but for the long term, avoiding over-promising and under-delivering, and instead, creating sustainable value for years, not months,” Huang told BeInCrypto.

Simply put, it is a critical time for the crypto market to realign with its original purpose: creating financial independence. This shift is necessary to prevent the crypto market from collapsing into a full-blown crisis.