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MACRO ECONOMIC SENTIMENT
The last few quarters have been a sentiment roller coaster. Post-US election, crypto enthusiasm reined. That shifted in February with worry about US-driven tariffs and equity, bond and crypto markets declining through early April. Since then, markets have recovered, in some cases, back to previous highs.
CRYPTO INDUSTRY SENTIMENT
Bitcoin hit an all-time high (+30% for the quarter), ETH performed even better (+39%), stablecoin legislation in the US advanced, the blockbuster IPO of Circle and the emergence of “treasury strategies” have all bolstered crypto sentiment in Q2.
However, Ethereum and Solana are 48% and 45% below all time highs, respectively. Similarly, the Defi Pulse Index is 90% below its highs.
While both winners and losers appear to be emerging, overall sentiment is very good, which is reflected in the M&A, financing and public markets data for Q2 2025.
Q2 2025 CRYPTO HIGHLIGHTS
M&A: Exceptional Q2 2025: resoundingly the best quarter ever
M&A deal activity and consideration paid in Q2 2025 far exceeded Q1, setting new all-time records. Crypto native businesses are increasingly turning to M&A as an important growth strategy. The far bigger news is that traditional financial services players are beginning to demonstrate increasing commitment to crypto and digital assets. Architect Partners anticipates both groups will become increasingly active in the ensuing quarters.
Private Financing: remains steady
Slightly slower pace but beginning to skew toward larger and later stage. Architect Partners believe the return of the later-stage financing markets is an important indicator of crypto industry health.
Public Markets: record valuations
After a challenging Q1, the Architect Partners Crypto Index was up 48% this quarter. Looking from a longer term perspective, Coinbase, the standard bearer of our industry, is now trading 7% above its all time closing high.
Interestingly, spot trading volume, the lifeblood of many in our index, declined 31% in Q2 2025, and is 44% below the last peak levels in this cycle. We believe this indicates the diversification of revenues streams that many have pursued, a very healthy signal. Lastly but not least, Circle’s IPO certainly acted as a positive catalyst as well as $66.5 billion being invested in 82 public “crypto treasury strategy” initiatives.
STRATEGIC THEMES ARCHITECT PARTNERS IS TRACKING
To keep us honest let’s continue our assessment of important crypto industry themes
Crypto Has Delivered Exceptional Value Creation
- Q4 Statement: Crypto has attracted $130B of risk capital which today represents $3.4T in value and 25x returns, much better than traditional venture investing. This far outpaces the Internet at the same point in market development.
- Q1 Progress: Our 2025 update to Family Ties was published on February 13th. Q2 2025 ended with $2.8T in value (vs. $3.4T in Q4) but the fundamental point remains: crypto investment returns have been exceptional.
- Q2 Progress: $3.8 trillion as of June 30, again in record territory.
Initial Public Offerings are Coming
- Q4 Statement: Numerous companies are on that track but 2026 may be stronger than 2025.
- Q1 Progress: Circle just released their S-1 and Amber Group debuted on the NASDAQ.
- Q2 Progress: Circle’s exceptional debut and the unexpected rise of the treasury strategy.
Leverage Is Quickly Returning
- Q4 Statement: Is leverage friend or foe this time?
- Q1 Progress: Friend so far, with risk management high priority. Data is difficult to compile but we see significant growth in both collateralized and uncollateralized lending.
- Q2 Progress: Q1 trend continuing.
Mergers & Acquisitions – It’s Time for Urgency
- Q4 Statement: Traditional financial services companies are entering crypto, a potentially existential competitive threat to some crypto-native players. Both will be spurred into action.
- Q1 Progress: Legislation is important for action but traditional financial services players are already re-engaging in preparation.
- Q2 Progress: Record quarter with participation by both leading crypto natives and the beginning of the long-term trend of traditional financial services embracing crypto and digital assets.
Moving Beyond Speculation – An Important Next Step
- Q4 Statement: Stablecoins are proving to be a real-world use case, with businesses and consumers partaking. Other use cases with both viability and scalability remain unclear.
- Q1 Progress: The payments use case is also taking root.
- Q2 Progress: Payments, often using stablecoins, are tracking at $100 – $300 billion annually and growing quickly. See Architect Partners: Crypto Payments & Payment Infrastructure: The Strategic Opportunity (Part I: Why Crypto Payments). Under the same theme, US stablecoin legislation continues to advance in the US Senate
Eric F Risley
Founder & Managing Partner
July 8, 2025