Venture capital (VC) firms, including Crypto.com Capital, are expressing concerns about the long-term viability of the booming valuations in the crypto industry, according to a Bloomberg report.

The crypto industry has recently experienced a surge in funding rounds, coinciding with a significant increase in the value of Bitcoin and other cryptocurrencies. The U.S. spot Bitcoin ETF has attracted substantial investment and global attention, prompting VC firms to consider capitalizing on the growth. However, they remain cautious about the sustainability of the rising valuations.

Kris Marszalek, the CEO of Crypto.com, has revealed that their venture capital arm is uncertain about the long-term prospects of the surging valuations in the sector. Crypto.com Capital, the VC arm of the crypto exchange Crypto.com, has reduced its investment activity over the past 18 months, even during the market recovery.

Despite investing $500 million into startups in the crypto sector, Crypto.com Capital has scaled back its investment activity. According to Dealroom data, the VC firm has made only four investments since 2023, compared to 35 investments before 2023.

Venture capitalists have invested over 52% into crypto projects in March, with the majority going into projects related to crypto infrastructure and decentralized finance (DeFi). However, some capital partners are hesitant to invest more money due to the hype in the industry, which seems to be higher despite significant concerns. Limited partners are reluctant to pour in more money until venture funds start showing tangible returns.

Silicon Valley venture capital giant Andreessen Horowitz has announced plans to raise $6.9 billion for new funds, including two AI-focused funds. However, the firm has postponed allocating funds for crypto.

Crypto.com Capital has invested millions into blockchain and digital assets-related projects such as Berachain, Merkle Manufactory, and others. Currently, the Bitcoin price is trading under selling pressure at $63,574 after hitting a new all-time high of $73,750 in March. The underlying weakness is due to macro, geopolitical, and technical charts.