Crypto Venture Capital Backers Are Dubious of Bull-Market Hype

Judging by a record Bitcoin rally that fueled a $1 trillion jump in the digital-asset market this year, crypto fever is back. But look beneath the surface to trends in venture capital and a far more sober picture emerges.

While venture funds are rushing to try and raise cash, the limited partners they tap for money are wary of hype and mindful of the lessons of 2022. Back then, valuations collapsed alongside the implosion of crypto outfits such as hedge fund Three Arrows Capital and Sam Bankman-Fried’s fraudulent FTX exchange.

The shake out destroyed a big chunk of capital, ...