I just reviewed some quite revealing financial documents obtained by Fortune from the SEC about the leading crypto VC funds, and there is an interesting story behind what appears to be a widespread decline in assets under management.

The first surprising thing is that almost all the major players—Paradigm, Pantera, a16z crypto, Multicoin—saw their AUM decrease in 2025. But here’s the important part: this doesn’t mean they failed. In fact, some simply returned profits to their investors at the right time.

Let’s take a16z crypto as an example. Their four cryptocurrency funds fell nearly 40% to $9.5 billion, but that was because they deliberately distributed returns at the market peak. The result? Their first fund achieved a DPI of 5.4 times. Compared to other 2018 venture capital funds, that’s exceptional. They made money and returned it to the LPs. End of story.

Multicoin experienced something more brutal. Their AUM was cut in half to $2.7 billion. The reason is that they operate both a hedge fund and a venture fund, so when crypto assets retreated from October 2025, they were hit harder than others. Additionally, Kyle Samani left in February to focus on other areas of tech investing.

Pantera also saw their AUM decline, but again, that’s not the whole story. They have five portfolio companies going public in 2025, including Circle and BitGo. These exits generated significant cash flows for the LPs.

Now, if there’s a winner here, it’s Haun Ventures. It was the only one that grew countercyclically, with a 30% year-over-year increase in AUM, approaching $2.5 billion. Why? Katie Haun nailed where to invest. Her bet on BVNK, a stablecoin company, was acquired by Mastercard for up to $1.8 billion. Additionally, they raised a new fund of $1 billion in 2025. That’s what happens when you identify which crypto and which segment will explode in the cycle.

What’s fascinating is that despite all this, the leading funds are not stopping. Paradigm is raising up to $1.5 billion. a16z crypto is raising up to $2 billion. Dragonfly just closed its fourth fund of $650 million. They are actively betting on the next cycle.

The reality is that crypto VC funds are fundamentally different from traditional tech funds. Their positions are directly exposed to token price volatility. Multicoin is the extreme case: it grew 20,287% between 2017 and 2021, then retreated 90% in 2022. That’s unthinkable in traditional VC.

However, bear markets are also windows to buy at low prices. a16z crypto plans to complete its fifth fund in the first half of 2026 under Chris Dixon’s leadership, betting entirely on blockchain. Paradigm, on the other hand, is expanding into AI and robotics. Two different strategies, two different ways of seeing where the next crypto ecosystem boom will come from.

The lesson here is that a reduction in AUM doesn’t always mean failure. Sometimes it means smart investors have already won and are positioning themselves for the next round.