Crypto Funding Hits $4.9B in Q1 2025 With US Firms Leading the Charge

Cryptocurrency

Summary:

MGX's $2 billion Binance investment boosts Q1 2025 crypto funding despite lingering market challenges.

Crypto venture funding reached $4.9 billion in the first quarter of 2025, marking a strong comeback for the industry, according to a May 1 report by Galaxy.

The total capital raised was 40% higher than the previous quarter and came from 446 deals, which also reflected a 7% growth during the period. This makes the first quarter the most active period for crypto fundraising since late 2022. Crypto Funding Hits $4.9B in Q1 2025 With US Firms Leading the Charge_1

Crypto Funding Hits $4.9B in Q1 2025 With US Firms Leading the Charge_1

MGX’s $2 billion investment in Binance was a major contributor to this figure, which accounted for over 40% of the capital raised. Excluding this single deal, first-quarter funding would have stood at $2.8 billion, reflecting a 20% decline compared to the fourth quarter of 2024.

Crypto investments by category

The Binance investment pushed the Trading, Exchange, Lending, and Investing sector to the top of the funding chart. This category attracted $2.55 billion, with a 47.9% growth rate. If Binance is excluded, the DeFi sector would have led the quarter with $763 million in capital inflows.

Web3-related projects saw the highest number of deals. These included gaming, NFTs, DAOs, and metaverse initiatives, with 73 rounds representing 16% of all transactions. Trading-related firms followed with 62 deals. Crypto Funding Hits $4.9B in Q1 2025 With US Firms Leading the Charge_2

Crypto Funding Hits $4.9B in Q1 2025 With US Firms Leading the Charge_2

Galaxy also reported a shift in investor focus. For the first time since the first quarter of 2021, most of the capital, about 65%, went to later-stage companies. Early-stage rounds, mainly pre-seed deals, saw a slight dip but remained strong compared to previous cycles.

US startups dominated the funding scene, accounting for 38.6% of the total deal count. The UK came next with 8.6%, while Singapore and the UAE followed with 6.4% and 4.4% respectively. The uptick in US investment may reflect growing government support for digital assets.

Bitcoin price correlation

The report noted a recovery in the correlation between Bitcoin’s price movements and venture investment. The trend, which had weakened since early 2023, shows signs of strength over a multi-year horizon. Crypto Funding Hits $4.9B in Q1 2025 With US Firms Leading the Charge_3

Crypto Funding Hits $4.9B in Q1 2025 With US Firms Leading the Charge_3

Galaxy also said that fundraising remains difficult despite the year-over-year growth. Factors such as cautious allocator sentiment and the lingering impact of the 2022–2023 downturn continue to weigh on the market.

Additionally, the rise of AI has shifted investor focus away from crypto. The AI sector now commands the level of attention that crypto held in 2021 and early 2022. This is evident with the decline in funds raised by crypto-focused venture funds, which fell to $1.9 billion during the first quarter.

Despite these challenges, Galaxy remains optimistic, noting that 2025 is already on pace to outdo the previous year’s fundraising figures.

Source: Cryptoslate

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Manuel

Economic

Two Republican lawmakers have urged the U.S. Securities and Exchange Commission to delist Chinese companies, including Alibaba Group (9988.HK), that they say have military links that put U.S. national security at risk, the Financial Times reported on Friday.

The chair of the House China committee, John Moolenaar, and the chair of the Senate committee on ageing, Rick Scott, wrote to SEC chair Paul Atkins to take action against 25 Chinese groups, listed on U.S. exchanges, FT said.

"These entities benefit from American investor capital while advancing the strategic objectives of the Chinese Communist party . . . supporting military modernisation and gross human rights violations," they said in the letter, according to FT. "They also pose an unacceptable risk to American investors."

The companies also include search engine Baidu (9888.HK), online retail platform JD.com (9618.HK) and the popular social media platform Weibo (9898.HK).

The lawmakers said that the Chinese companies were "ultimately harnessed for nefarious state purposes," no matter how commercial they appeared on the surface, according to the FT report.

They said that the SEC had the tools and authority under the Holding Foreign Companies Accountable Act to suspend trading and compel delisting.

The SEC, Alibaba, JD.com and Baidu did not immediately respond to Reuters requests for comment. The Select Committee on the Chinese Communist Party and the U.S Senate committee also did not immediately respond to requests for comment.

More than 100 Chinese companies are listed on U.S. exchanges and have a collective market cap of around $1 trillion.

Investor concerns over the possible forced de-listing of Chinese companies from U.S. exchanges reemerged since the tit-for-tat trade war between the world's two largest economies.

Beijing said on Friday it is "evaluating" an offer from Washington to hold talks over President Donald Trump's crippling tariffs, signalling a potential de-escalation in the trade war that has roiled global markets.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

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Gerik

China–U.S. Trade War

Commodity

Rare earths as the backbone of modern power competition

Rare earth elements—comprising 17 strategic minerals along with lithium, cobalt, gallium, and others—are indispensable to modern technologies, ranging from smartphones and electric vehicles to advanced weaponry. Yet, the real battle lies not in their utility, but in who controls the extraction, refinement, and supply.

China has leveraged its cost advantages, state subsidies, and early industrialization to dominate both ends of the rare earths supply chain. According to the International Energy Agency (IEA), China is responsible for 61% of global rare earth mining and a staggering 92% of refining. Even more critically, it controls most of the processing for heavy rare earths, which are harder to extract and refine. The U.S. Geological Survey estimates China holds 44 million metric tons of reserves, or 34% of the global total.

This dominance, combined with China’s strategic foresight—beginning its rare earths extraction as early as the 1950s and scaling it aggressively from the late 1970s—has turned a technical resource into a geopolitical weapon.

Export restrictions and strategic signaling from Beijing

In April 2025, Beijing tightened export controls on seven heavy rare earth elements and related magnets, requiring special licenses and banning re-exports to the U.S., in a direct response to Washington’s new tariff regime. These moves serve as clear signals: China is willing to use its position as the world’s rare earths hub to counter Western pressure, much like it previously used its stranglehold on solar panel production.

According to Jan Giese of Tradium, a major rare earths supplier in Europe, many automotive manufacturers have only a 2–3 month stockpile of rare earth magnets. If EU or Japanese companies cannot secure new shipments within this timeframe, critical sectors—especially electric vehicles—could face operational breakdowns.

Cory Combs, an analyst at Beijing-based consultancy Trivium, notes that China has so far spared light rare earths like neodymium and praseodymium from restrictions. This gives Beijing a powerful card to escalate further if trade tensions intensify.

Diversification efforts accelerate but face steep challenges

The United States, European Union, and key allies have launched a wave of initiatives aimed at loosening China’s grip. The U.S. Department of Defense has allocated over $439 million since 2020 to develop a fully domestic rare earth supply chain capable of meeting national defense needs by 2027. Several American firms now see China’s export curbs not as a setback but as an opportunity to fast-track domestic production.

The EU’s Critical Raw Materials Act has similarly ambitious goals: by 2030, it aims to mine at least 10% of its annual demand domestically and process 40% within the bloc. Regulatory streamlining and the designation of “strategic projects” aim to speed up the otherwise slow permit processes.

Elsewhere, Australia is emerging as a key partner for the West, offering substantial reserves and favorable regulatory policies, including tax incentives beginning in 2027. South Korea, too, is actively forging supply agreements with U.S. firms while investing in recycling and alternative technologies.

Mongolia, often overlooked, holds an estimated 31 million tons of rare earth reserves—second only to China. Though the sector is in its infancy, increased cooperation with the U.S. could channel capital into exploration and production, potentially making Mongolia a new node in the global supply network.

High barriers to breaking China’s dominance

Despite growing momentum, the path to independence from Chinese rare earths is strewn with complex barriers.

First, the economic cost and time requirements are substantial. Building extraction and processing capacity from scratch often requires several years and hundreds of millions in investment.

Second, technical expertise remains concentrated in China. For example, the solvent extraction methods used to separate rare earths into usable forms are labor-intensive and technologically demanding. China’s recent ban on exporting such technologies further widens the technical gap.

Third, environmental regulations pose ethical and logistical hurdles. The radioactive byproducts of rare earth mining make it a politically sensitive industry in many democracies. Even countries eager to compete often hesitate to launch full-scale domestic operations due to public backlash and regulatory obstacles.

As a result, while there is clear correlation between Western diversification efforts and China’s tightening control, the causal reversal—i.e., successfully breaking China’s grip—remains distant.

A long-term realignment, not a quick fix

Though Beijing’s latest restrictions are escalating tensions, they are also forcing a long-overdue realignment. The West is finally recognizing rare earths not just as a commodity market but as a security issue—akin to energy independence or semiconductor resilience.

New supply hubs may emerge across Eurasia and the Indo-Pacific, but the timeline for such transitions will be measured in decades, not years. Until then, China retains the ability to exploit its market power in precise and strategic ways—what economist Justin Wolfers of the University of Michigan calls “surgical economic influence aimed directly at U.S. industrial weaknesses.”

This reality implies that short-term shocks—like disrupted EV production or delayed military projects—may become recurring features of the global economy unless international cooperation and long-term investment strategies are sustained. The rare earth race is no longer just about resources; it is about industrial survival and geopolitical leverage in a multipolar world.

Source: ORFOnline

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Manuel

Bond

Central Bank

US Treasuries fell after stronger-than-expected US employment data showed tariff uncertainty hasn’t hit the nation’s jobs market yet, prompting traders to trim bets on imminent interest-rate cuts.

The declines on Friday pushed yields on two- to five-year notes higher by more than 10 basis points after non-farm payrolls rose 177,000, above all estimates compiled by Bloomberg. Traders pulled back on bets for Federal Reserve rate reductions, pricing in 79 basis points of total easing this year, compared to around 90 basis points before the report.

Traders pared their expectations for a rate cut in the coming months, only pricing in the next move in the second half of the year. Economists at Goldman Sachs and Barclays pushed back their forecasts for the Fed to lower its benchmark to July, rather than June, after the data.

The Fed is “going to have to wait until they see any kind of impact in terms of a rise in the unemployment rate,” Jeffrey Rosenberg, a portfolio manager at BlackRock Inc., said on Bloomberg Television. “None of this data reflects the impact of the shock, and we will have to see that data show up.” US Treasuries Slide as Solid Jobs Market Gives Fed Room on Rates_1

US Treasuries Slide as Solid Jobs Market Gives Fed Room on Rates_1

Two-year yields are on course for their largest two-day rise since October as investors rethink bets that President Donald Trump’s tariffs will quickly slow the world’s largest economy. On Thursday, bonds fell after a manufacturing survey came in stronger than anticipated.

For investors, it’s a question of how to weigh the economic pessimism that has been seen in some recent surveys against the resilience in top-tier measures of employment such as Friday’s jobs report. US consumer confidence fell in April to an almost five-year low.

Traders in the futures and options markets trimmed back their expectations for the Fed, fully pricing in only three quarter-point rate cuts before the end of 2025, versus four earlier in the week. Only 24 basis points of easing are priced in for July, just shy of a full quarter-point cut. There’s about 46 basis points of cumulative easing priced in by September.

One popular trade has emerged that stands to benefit should the Fed refrain from cutting rates at all this year. That position was bought again in the lead-up to the employment report.

“Cutting in late July allows the committee to see more data on the evolution of the labor market, and should benefit from resolving uncertainty about tariffs and fiscal policy,” Barclays chief US economist Marc Giannoni and his colleagues wrote in a note on Friday, adjusting their forecast to a July move from a June one.

Goldman Sachs economists led by Jan Hatzius also pushed back their forecast for the Fed to cut rates to July from June, citing payrolls and manufacturing survey data.

In the aftermath of Friday’s data, a couple of large futures block trade in both 5- and 10-year note contracts added to the downside pressure and kept yields supported near highs of the day. The combined risk weighting across the two sales was equal to just over $1 million per basis point move.

Complicating matters for the economic outlook is uncertainty over what tariffs will eventually be instated and when, as US negotiations with key trading partners are underway or being planned. China has quietly started to exempt some US goods from tariffs that likely cover around $40 billion worth of imports, in what looks like an effort to soften the blow of the trade war on its own economy. Japan, meanwhile, said trade discussions will likely gain momentum in mid-May.

For now, Fed officials have been waiting to see what top-tier economic data reveals, while remaining an guard against the possibility that tariffs will push up inflation. Speaking in late April, Fed Governor Christopher Waller said that he’d support rate cuts if there’s a significant rise in unemployment, which could happen if Trump reinstates more aggressive tariff levels and firms begin laying off more workers.

“We know that all of these singular data points can be noisy, so you still need to see some consistency of data for the Fed to act,” said Kristina Campmany, a senior portfolio manager at Invesco, in an interview. Money market pricing reflects the “bimodal” risks to the outlook which could see the Fed stand pat on rates or cut aggressively, she said. US Treasuries Slide as Solid Jobs Market Gives Fed Room on Rates_2

US Treasuries Slide as Solid Jobs Market Gives Fed Room on Rates_2

The labor data offers the last major reading of the US economy’s health ahead of the Fed’s two-day gathering next week. Traders and economists alike expect the Fed to keep rates on hold when they meet next week, despite pressure from Trump to cut rates. The Republican renewed his call for lower rates on Friday in a social media post.

There’s been “no major effect from the April tariffs in the labor market so far,” said Evelyne Gomez-Liechti, a strategist at Mizuho. “The Fed is in no rush to cut rates, especially given the increased policy uncertainty, which is creating risks to both sides of their dual mandate.”

Source: Bloomberg

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Gerik

Commodity

Falling oil prices prompt fiscal recalibration

In response to the sharp decline in global oil prices since early April, Russia’s Ministry of Finance has significantly revised its revenue outlook for 2025. The government now expects to earn approximately $101.7 billion (8.32 trillion rubles) from oil and gas, a notable 24% drop from the earlier forecast of $133.7 billion (10.9 trillion rubles). This adjustment reflects the urgent need to realign fiscal expectations with market realities, as Urals crude—Russia’s key export blend—has plunged to near $50 per barrel.

The revised outlook also reveals a substantial decline in the expected contribution of oil and gas to the country’s GDP. Energy revenues are now projected to account for only 3.7% of Russia’s GDP in 2025, down from the previously anticipated 5.1%. This signals not only a loss in revenue but also a reduced fiscal cushion at a time when government spending—particularly related to the war in Ukraine—is rising.

Budget deficit forecast triples amid revenue shortfall

Accompanying the downgrade in energy revenue is a sharp upward revision to Russia’s expected budget deficit. The Finance Ministry now projects a deficit of 1.7% of GDP for 2025, a dramatic increase from the earlier 0.5% estimate. This tripling of the deficit highlights the growing imbalance between state spending and income, especially as oil prices remain under pressure.

This outcome underscores a relationship where the drop in global oil prices (A) directly leads to lower government income (B), thereby necessitating increased borrowing or spending cuts. The causal link here is strong and direct, given the centrality of hydrocarbons to the Russian budget.

Brent volatility and OPEC+ uncertainty weigh on Russian oil

Over the past month, oil prices have declined by roughly $10 per barrel. On Thursday morning, Brent crude was hovering near $60 per barrel—a far cry from the levels that once buoyed Russia’s fiscal confidence. Contributing to this downturn are global trade tensions, weak demand projections, and Saudi Arabia’s suggestion that it could ramp up production more quickly than expected, even at the expense of lower prices.

As a member of OPEC+, Russia is directly exposed to these market movements. Compounding the challenge is the discounted price at which Russian crude is being sold due to Western sanctions. These discounts widen the gap between Brent and Urals crude, squeezing Russia’s margins and limiting its ability to benefit even from modest market rallies.

Impact on the broader Russian economy

The mounting pressure on energy revenues poses deeper risks for Russia’s macroeconomic stability. Central Bank Governor Elvira Nabiullina warned last month that the sustained lower selling price of Russian oil could have a detrimental impact on the broader economy. She specifically noted that continued trade war escalations could suppress global trade volumes and energy demand, thereby worsening Russia’s fiscal vulnerabilities.

The link between falling oil prices and overall economic performance in Russia is both correlative and causal. Not only do oil revenues fund a large share of government spending, but they also underpin broader economic confidence, exchange rate stability, and investment flows. A protracted period of subdued prices could therefore result in contractionary ripple effects across sectors beyond energy.

Geopolitical burdens and structural strain

In parallel with declining revenues, Russia’s fiscal pressures are aggravated by its ongoing war in Ukraine. Military expenditures have surged, making the economy increasingly dependent on stable oil revenue. The sanctions regime imposed by Western countries has forced Russia to find alternative markets, often at steep discounts, exacerbating its budgetary strain.

This scenario reflects an adverse combination: rising outflows and falling inflows. The mismatch is structural, not temporary, and may lead to difficult decisions in 2025—ranging from currency interventions to possible spending cuts or debt issuance. The risk that this gap might grow further if global oil markets remain depressed is significant.

A fragile energy-dependent economy under duress

Russia’s sharp downward revision of its energy revenue forecast reveals the fragility of an economy still deeply reliant on oil and gas. The link between oil prices and fiscal health remains direct and potent. While global market forces and geopolitical uncertainty continue to shape price volatility, Russia's ability to cushion its economy is weakening.

Without a rebound in oil prices or a geopolitical breakthrough that eases sanctions and stabilizes demand, Moscow may face widening deficits and deteriorating economic performance in the coming year. The correlation between oil price collapse and fiscal vulnerability in Russia is now more than a pattern—it is becoming a structural constraint on the Kremlin’s strategic ambitions.

Source: OilPrice

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Manuel

Commodity

Russia-Ukraine Conflict

U.S. officials have finalized new economic sanctions against Russia, including banking and energy measures, to intensify pressure on Moscow to embrace U.S. President Donald Trump’s efforts to end its war on Ukraine, according to three U.S. officials and a source familiar with the issue.

The targets include state-owned Russian energy giant Gazprom and major entities involved in the natural resources and banking sectors, said an administration official, who like the other sources requested anonymity to discuss the issue.

The official provided no further details.

It was far from clear, however, whether the package will be approved by Trump, whose sympathy for Moscow's statements and actions have given way to frustration with Russian President Vladimir Putin’s spurning of his calls for a ceasefire and peace talks.

The U.S. National Security Council “is trying to coordinate some set of more punitive actions against Russia,” said the source familiar with the issue. “This will have to be signed off by Trump.”

“It’s totally his call,” confirmed a second U.S. official.

“From the beginning, the president has been clear about his commitment to achieving a full and comprehensive ceasefire," said National Security Council Spokesman James Hewitt. "We do not comment on the details of ongoing negotiations.”

The U.S. Treasury, which implements most U.S. sanctions, did not respond to a request for comment.

An approval by Trump of new sanctions, which would follow the Wednesday signing of a U.S.-Ukraine minerals deal that he heavily promoted as part of his peace effort, could signify a hardening of his stance towards the Kremlin.

Since Russia launched its full-scale invasion of Ukraine in 2022 the United States and its allies have added layer upon layer of sanctions on the country. While the measures have been painful for Russia's economy, Moscow has found ways to circumvent the sanctions and continue funding its war.

Trump "has been bending over backwards to give Putin every opportunity to say, 'Okay, we're going to have a ceasefire and an end to the war,' and Putin keeps rejecting him," said Kurt Volker, a former U.S. envoy to NATO who was U.S. special representative for Ukraine negotiations during Trump's first term. "This is the next phase of putting some pressure on Russia."

"Putin has been escalating," he continued. Trump "has got the U.S. and Ukraine now in alignment calling for an immediate and full ceasefire, and Putin is now the outlier."

Since assuming office in January, Trump has taken steps seen as aimed at boosting Russian acceptance of his peace effort, including disbanding a Justice Department task force formed to enforce sanctions and target oligarchs close to the Kremlin.

He also has made pro-Moscow statements, falsely blaming Ukrainian President Volodymyr Zelenskiy for starting the conflict and calling him a "dictator."

Meanwhile, Steve Witkoff, Trump’s special envoy, has advocated a peace strategy that would cede four Ukrainian regions to Moscow, and has met Putin four times, most recently last week.

But three days after that meeting, Russian Foreign Minister Sergei Lavrov reiterated Putin's maximalist demands for a settlement and Moscow’s forces have pressed frontline attacks and missile and drone strikes on Ukrainian cities, claiming more civilian casualties.

Reuters reported in March that the United States was drawing up a plan to potentially give Russia sanctions relief but Trump in recent weeks has expressed frustration with Putin's foot-dragging on ending the invasion and last Saturday held a "very productive" one-on-one meeting in the Vatican with Zelenskiy.

The next day, Trump said in a post on his Truth Social platform that he was “strongly considering large scale Banking Sanctions, Sanctions and Tariffs on Russia” that would remain until a ceasefire and final peace deal.

Volker said that Russia has been earning hard currency that funds its military through oil and gas sales to countries like India and China and that it would be "very significant" if Trump slapped secondary sanctions on such deals.

Secondary sanctions are those where one country seeks to punish a second country for trading with a third by barring access to its own market, a particularly powerful tool for the United States because of the size of its economy.

Source: Reuters

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Gerik

China–U.S. Trade War

Economic

Signals of diplomatic recalibration

On May 2, China’s Ministry of Commerce released a carefully worded statement confirming that it had observed repeated efforts by senior U.S. officials to initiate dialogue on tariffs. This comes after years of economic confrontation that intensified under the Trump administration, particularly with the dramatic escalation of tariffs that pushed rates as high as 145% on certain Chinese goods. In retaliation, Beijing imposed tariffs of up to 125% on American imports, further entrenching the dispute.

While the current U.S. administration has maintained a portion of these trade barriers, new developments indicate that Washington may be reassessing its approach. According to sources close to Chinese state broadcaster CCTV, the U.S. has proactively reached out through multiple channels to explore possible de-escalation, marking a subtle yet meaningful shift in tone.

China’s firm position: Tariff rollback as a precondition

Beijing’s reaction has been measured but resolute. A spokesperson from the Ministry of Commerce emphasized that any movement toward serious negotiation would require the United States to first demonstrate “sincerity” by reversing what China considers wrongful actions—specifically the imposition of unilateral tariffs. The message is clear: while China is open to dialogue, it insists that such talks must be grounded in reciprocity and fairness.

This stance reflects a conditional framework rather than an outright refusal. It suggests a correlation, not necessarily a direct causation, between Washington’s willingness to remove tariffs and Beijing’s readiness to engage. In other words, removing tariffs may not guarantee progress, but it is a necessary precondition to unlock the next phase of talks.

Economic pressure and selective exemptions

Despite the protracted conflict, both governments have taken steps to mitigate domestic economic damage by issuing exemptions on select key goods. These carve-outs reveal a mutual understanding of the practical limits of a prolonged tariff war, particularly as global supply chains remain under strain from post-pandemic disruptions and geopolitical uncertainties.

The exemptions also signal a nuanced economic strategy. Rather than a blanket retreat from confrontation, both sides have selectively shielded industries deemed critical to domestic economic health. This shared behavior indicates a convergence in policy rationale, if not in diplomatic rhetoric, suggesting a functional interdependence beneath the surface of official hostility.

Washington’s approach: Seeking economic stabilization

Behind the scenes, reports indicate that high-level U.S. officials, including Treasury Secretary Scott Bessent and White House economic advisor Kevin Hassett, have voiced optimism about reaching a breakthrough. The motivation appears driven by concerns over inflation, stagnating consumer sentiment, and broader geopolitical calculations as the 2026 U.S. elections loom. Opening a line of dialogue with China may be a strategic move aimed at economic stabilization and global investor confidence.

Whether this constitutes a fundamental policy shift or a tactical adjustment remains to be seen. The absence of concrete U.S. concessions thus far means the cause-effect relationship between U.S. outreach and potential policy changes from China is still speculative. Nonetheless, the pattern of engagement suggests that both sides are testing the waters for a possible soft reset.

A cautious opening in a long-term standoff

The latest developments point to a cautious yet noteworthy shift in U.S.-China trade relations. While no formal negotiations have begun, the fact that Washington is signaling willingness to talk—and that Beijing is openly responding—could mark the start of a recalibrated engagement phase. Still, progress will likely hinge on whether the U.S. is prepared to meet China’s demand for a rollback of unilateral tariffs.

In analytical terms, this dynamic exhibits a conditional correlation: dialogue may follow tariff relief, but it is not assured without demonstrable shifts in U.S. trade posture. For now, the bilateral standoff persists, though with signs of possible thawing—driven by both economic pragmatism and geopolitical recalculations.