7 days ago4 min readSummaryYou're reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc., CoinDesk Indices or its owners and affiliates.Happy Wednesday,This is your institutional newsletter, Crypto Long & Short. This week:Later-stage deals took 57% of crypto venture capital last quarter. Varun Datta of Truth Ventures argues the crowd is paying up for the wrong kind of safety.Top headlines institutions should pay attention to by Francisco Rodrigues“Robinhood chain daily DEX volume crosses $1 billion” in Chart of the WeekThanks for joining us!- Kim KlemballaCrypto VCs are mistaking consensus for disciplineBy Varun Datta, venture capitalist and CEO of Truth VenturesVenture capital likes to think of itself as a risk-taking industry. The pitch decks and panel talks all say the same things: we spot visionary founders early, back unproven ideas, sit with uncertainty long enough for it to pay off. At least, that's how the industry portrays itself.However, the data tells a different story.According to Galaxy Research’s Q1 2026 crypto venture capital report, investors allocated about $1.1 billion to just eight new crypto venture funds, the lowest quarterly fund count since the third quarter of 2020. Later-stage companies attracted 57% of all capital deployed during the quarter, while pre-seed deals represented just 19% of completed transactions.Capital has not disappeared, it has just shifted toward bigger checks for fewer companies, usually those that can already demonstrate product-market fit. What is being presented as discipline increasingly looks like a retreat from the founding stage that venture capital was created to serve.This creates a problem for the venture capital industry, but it is also an opportunity for investors willing to break from the pack.When funds wait for traction, a recognized category and somebody else’s term sheet to validate a company, they may reduce uncertainty, but they also pay a higher price and compete with every other investor pursuing the same small group of proven businesses. That is not contrarian investing. It is a consensus trade.Many of the technologies that defined crypto’s previous cycle did not look inevitable when they first received funding. Layer-2 networks, DeFi protocols and essential developer tools were backed before their markets were established. Investors willing to commit during those quieter periods captured value that disappeared once the opportunity became obvious.A similar window may be opening now. Founding-stage capital is scarce and sentiment remains cautious while AI has absorbed a growing share of investor attention. OECD analysis found that AI companies attracted 61% of global venture capital investment in 2025. Yet crypto founders are still building the infrastructure required for digital finance to reach mainstream users.Investors should use this period to look for three things:First, evidence of a genuine problem rather than attachment to a popular narrative. The strongest infrastructure companies often begin by solving an unglamorous constraint around payments, liquidity, interoperability, compliance or developer experience.Second, early signs of real demand. At the founding stage, this may not mean substantial revenue. It can mean developers repeatedly using a tool, customers participating in product design or users returning without token incentives.Third, a model capable of surviving changing market cycles. Sustainable economics, disciplined token design and a clear route to distribution matter more than growth manufactured through short-term subsidies.This does not mean abandoning diligence or funding every single early-stage idea. It means recognizing that eliminating uncertainty also eliminates much of the potential upside. The purpose of venture capital is not to wait until risk disappears — quite the opposite. It is to determine which risks are worth taking.The current funding gap gives investors access to promising teams at more realistic valuations and with less competition. Those who wait for the next market narrative to confirm where value is being created will arrive alongside everyone else, and pay accordingly.The takeaway is straightforward: stop treating consensus as evidence. The next generation of crypto infrastructure is being built now, and the investors who develop conviction before traction becomes obvious will be best positioned to benefit.Chart of the Week Robinhood chain daily DEX volume crosses $1 billionRobinhood chain hit an all-time-high daily DEX volume of $1.49 billion on Aug 31 — up ~474% since the start of August . CASHCAT, one of the leading tokens on the chain, is up ~373% over that same period, from ~$0.041 to ~$0.193.Looking for more? Receive the latest crypto news from coindesk.com and market updates from coindesk.com/institutions.12345678910