I noticed an interesting point in the crypto market. Venture firm Dragonfly Capital has just closed its fourth fund with $650 million. And this is happening amid a sector that is not experiencing the best times. Honestly, it seems like a counterintuitive move.

Haseeb Qureshi, managing partner of the firm, directly wrote on social media that this is a strange time to celebrate. The environment is dark, the market is bearish, but Dragonfly still attracted capital. Interestingly, the company has historically done exactly that — investing during downturns. During the ICO crash in 2018, before the Terra collapse in 2022. And these “vintages” later turned out to be the best investments.

Bitcoin has lost about 46% of its value over the past year from a peak of $126,000. It is now trading around $74,000. The total market capitalization of cryptocurrencies has fallen by more than $1.4 trillion. The sentiment is truly gloomy, but Qureshi sees the situation differently.

He highlights financial applications of cryptocurrencies as the main focus of the new fund. Stablecoins, decentralized finance, prediction markets, tokenization. In his view, these sectors are exploding, while non-financial crypto applications have failed. DeFi is already competing with traditional finance, financial institutions worldwide are developing crypto strategies, and prediction markets are becoming a reliable source of information.

Examples of Dragonfly’s investments confirm this theory: Polymarket, Ethena, Rain, Mesh. All in the financial infrastructure segment. At the Consensus Hong Kong conference, crypto venture investors expressed a similar position — investing in what works, and selectively betting on new sectors like artificial intelligence and prediction markets.

Qureshi essentially doubles down on the idea that crypto is not dead, but simply being rethought. For him, the new fund is the biggest bet that the crypto revolution is still in the early stages of exponential growth. The gloom around is not the end of the story, but a transitional period. This perspective is interesting, especially when you see major venture players willing to invest hundreds of millions despite the gloomy market sentiment.