How Top Investment Firms Are Planting Seeds During the Crypto Bear Market

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The crypto world has undeniably entered a bear market. After the dramatic collapses of major projects like Luna and StepN, speculation about market bottoms has given way to reality: the downturn is here. But while retail investors hesitate, top-tier venture capital firms are quietly laying the groundwork for the next bull cycle.

Rather than retreating, institutions like a16z, DCG, Coinbase Ventures, and others are actively investing—strategically "seeding" the ecosystem during this downturn. Their actions reveal not only confidence in crypto’s long-term future but also distinct investment philosophies that shape the industry's evolution.

Let’s explore how 10 of the most influential crypto investment firms are positioning themselves during this bear market.

A16z: Betting Big on Web3 and the Future of Gaming

Andreessen Horowitz, commonly known as a16z, is one of Silicon Valley’s most iconic venture capital firms. Founded in 2009 by Marc Andreessen and Ben Horowitz, it gained fame for early bets on Facebook, Twitter, and Airbnb.

In crypto, a16z was ahead of the curve. Back in 2013, when Bitcoin was still widely dismissed as a scam, they led a $25 million Series B round in Coinbase—a company with just eight employees at the time. Over the next seven years, a16z invested in Coinbase eight times, ultimately becoming its largest external shareholder upon IPO.

Today, a16z has backed over 43 blockchain projects across nine countries, including Solana, Uniswap, OpenSea, and Compound. Their strategy spans DeFi, NFTs, GameFi, stablecoins, DAOs, and Web3 infrastructure.

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A key theme in their portfolio? Blockchain gaming. A16z believes games will redefine how we socialize, work, and entertain ourselves in the coming decades. While many of their game investments are pre-launch, they also fund traditional Web2 studios transitioning into Web3—ensuring high-quality user experiences beyond just "play-to-earn" mechanics.

Their approach isn’t speculative; it’s foundational. They’re not chasing short-term gains but building the architecture of the next internet.

Coinbase Ventures: Fueling Open Financial Infrastructure

Coinbase Ventures, launched in 2018, is the investment arm of Coinbase—the first major U.S. crypto exchange to go public. Unlike traditional VC funds, it operates without a fixed fund size or full-time employees. This lean structure reflects Coinbase’s mission: to accelerate the development of an open financial system.

To date, Coinbase Ventures has supported over 150 startups across the crypto ecosystem. Notable investments include BlockFi, OpenSea, Dapper Labs, StarkWare, and TaxBit.

Their investment focus is strategic:

What sets them apart? They invest even in companies that could compete with Coinbase—because their goal isn’t dominance, but ecosystem health. As Emilie Choi, President and COO of Coinbase, puts it: “We want to help build a decentralized financial future.”

This philosophy makes Coinbase Ventures less a profit-driven fund and more a catalyst for innovation—funding the builders who will define tomorrow’s finance.

Binance Labs: Incubating the Next Wave of Blockchain Innovation

Founded in 2017 by CZ (Changpeng Zhao), Binance Labs is more than a venture fund—it’s a global incubator with a mission to solve critical problems in the blockchain space.

With over 170 investments across 25 countries, Binance Labs has backed pioneers like Terra (pre-collapse), Polygon, Kava, and Elrond. Many of these projects launched via Binance Launchpad, giving them immediate visibility and community support.

Their portfolio spans:

While many early bets were Ethereum-based, Binance Labs now actively funds multi-chain ecosystems—including Cosmos and Solana. They’re especially bullish on NFTs, GameFi, and Web3 as the future of digital interaction.

CZ’s influence can’t be overstated. His vision helped popularize trends like NFTs and decentralized gaming years before they hit mainstream adoption.

Alameda Research: High-Frequency Bets on Scalable Blockchains

Alameda Research, founded by Sam Bankman-Fried (SBF) in 2017, was both a quantitative trading firm and a venture investor. Though now defunct due to FTX’s collapse, its historical impact remains significant.

Alameda focused heavily on Solana and its ecosystem, believing high-speed blockchains would power global-scale applications. SBF famously predicted Solana would surpass Ethereum in adoption within years.

At its peak, Alameda had stakes in over 160 projects across DeFi, CeFi, NFTs, and infrastructure—including StarkWare, Helium, and Acala.

Despite its controversial end, Alameda exemplified how deep technical analysis and liquidity provision could shape early-stage ecosystems—especially on emerging chains.

DCG: Building the Crypto Ecosystem from Within

Digital Currency Group (DCG), founded by Barry Silbert in 2015, aims to be the “Berkshire Hathaway of crypto.” With over 160 portfolio companies across 30+ countries, DCG operates five core businesses:

DCG focuses on foundational layers: exchanges, payments, compliance, and infrastructure. Unlike others, they’ve largely avoided DeFi—Silbert has been publicly skeptical of yield farming and complex protocols.

Their geographic focus is clear: North America leads, followed by Europe and Asia. Only one Chinese project—Bitcoin China—has received funding.

DCG doesn’t chase trends. Instead, they build enduring institutions that support long-term adoption.

Paradigm: Research-Driven Innovation

Founded in 2018 by Fred and Matt Huang (former Sequoia partners), Paradigm takes a scientific approach to investing. They prioritize deep technical research and often participate directly in protocol design.

Their thesis? True disruption comes from paradigm shifts, not incremental improvements. That’s why they backed projects like Cosmos—a “layer zero” solution enabling interoperability—over mere Ethereum clones.

Paradigm focuses on:

They famously invested in Mina Protocol, a lightweight blockchain using zero-knowledge proofs to maintain a constant 22KB block size—ideal for mobile devices.

For Paradigm, every investment is a hypothesis tested through engineering rigor.

Animoca Brands: Champions of the Open Metaverse

Animoca Brands, led by Yat Siu, is all-in on the metaverse. Based in Hong Kong, they develop and invest in NFT-driven games like The Sandbox and F1 Delta Time.

With over 150 investments—including early stakes in Axie Infinity, Decentraland, and Dapper Labs—Animoca acts like a supercharged version of a16z in the gaming space.

Their belief? NFTs are the key to true digital ownership, enabling open metaverses where users control assets across platforms.

In 2021 alone, they made a new investment every six days—fueled by rising revenues and massive fundraising rounds.

While some question their valuation-heavy strategy, there’s no denying Animoca’s role in mainstreaming blockchain gaming.

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Three Arrows Capital: High-Risk Bets on DeFi

Three Arrows Capital (3AC), founded in 2012 by Su Zhu and Kyle Davies, specialized in macro trades across emerging markets. Though now liquidated after failing to meet margin calls in 2022, 3AC was once a major force.

Their portfolio was heavily skewed toward DeFi—82% of investments went into protocols like Aave, Synthetix, and KeeperDAO. Their biggest winner? Axie Infinity (AXS), which returned over 20,000%.

3AC thrived by identifying undervalued assets during bear markets—like Solana and Avalanche—then riding them into bull runs.

Their downfall underscores a lesson: even brilliant strategies fail without risk management.

Sequoia Capital: From Tech Giants to Crypto Disruptors

Legendary VC Sequoia Capital—investor in Apple, Google, and Oracle—entered crypto cautiously. After stepping back during the 2018 bear market, they re-emerged aggressively in 2021.

Their portfolio includes:

Unlike pure-play crypto VCs, Sequoia blends traditional tech expertise with blockchain innovation—backing both infrastructure and application layers.

They’ve also launched dedicated crypto funds across U.S., India, and China arms—signaling long-term commitment.

Blockchain Capital: Pioneers Since 2013

One of the earliest dedicated crypto funds, Blockchain Capital was founded in 2013 by Bart Stephens and Brock Pierce. They were first to launch a Bitcoin-focused VC fund—and first to accept Bitcoin as payment for fund shares.

Their historic bets include:

Their strategy? Diversified exposure across stages and sectors—from infrastructure to applications.

As pioneers, they’ve seen multiple cycles—and continue backing builders shaping the future.

FAQ: Understanding Institutional Moves in Bear Markets

Q: Why do VCs invest more during bear markets?

A: Bear markets reduce valuations and competition. Smart investors use this time to acquire equity at lower prices and support strong teams building foundational tech.

Q: Which sectors are top VCs focusing on now?

A: Core areas include Layer 2 scaling, DeFi primitives, Web3 infrastructure, NFTs/gaming, privacy tech, and cross-chain interoperability.

Q: Can retail investors follow these strategies?

A: Yes—by studying institutional portfolios, you can identify high-potential projects early. Focus on fundamentals: team strength, technical innovation, and ecosystem alignment.

Q: Are these firms still active post-FTX collapse?

A: Most remain highly active. While Alameda and 3AC failed due to leverage issues, firms like a16z, DCG, and Paradigm continue funding innovation with strong governance.

Q: How do I track where top VCs are investing?

A: Follow public disclosures via CoinGecko Venture Rounds, Crunchbase, or project announcements. Many firms publish research blogs detailing their theses.

Bear markets separate speculators from builders—and institutions from gamblers. The firms profiled here aren’t waiting for recovery; they’re creating it.

By backing foundational technologies today—from scalable blockchains to open metaverses—they’re planting seeds that will bloom in the next bull run.

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Whether you're an entrepreneur or an investor, studying these strategies offers invaluable insight into how value is created—not just captured—in the decentralized economy.