February 18, 2026. Dragonfly Fund IV has closed at $650 million, marking the largest raise in the firm’s history even amid a deep crypto bear market.
GP Haseeb Qureshi described the raise as a “big milestone,” noting extreme market fear and low sentiment while reiterating the firm’s contrarian approach to investing in financial crypto. The firm plans to continue backing projects with real world utility, including stablecoins, DeFi primitives, prediction markets, and tokenized assets.
High Signal Summary For A Quick Glance
- Dragonfly has closed Fund IV at $650 million, its largest fund to date.
- The raise occurred during a bear market, consistent with prior Dragonfly vintages.
- The firm argues financial crypto is accelerating despite broader sector fatigue.
- Recent bets include Polymarket, Ethena, Rain, and Mesh across DeFi and onchain finance.
- Crypto founders seeking late-seed to growth-stage capital.
- Startups building in stablecoins, DeFi, payments, and tokenization.
- Institutional LPs allocating capital to crypto venture funds.
- Market participants tracking capital formation during downturn cycles.
Background and Trends Leading to Dragonfly Fund IV
Dragonfly Capital, founded in 2018 by Haseeb Qureshi, has a track record of raising funds during crypto downturns, including Fund I in 2018, Fund II in 2021, and Fund III in 2022. Early 2026 mirrored prior bear markets, with Bitcoin down about 46% and total crypto value dropping over $1.4 trillion. Fund IV aligns with key trends such as growth in stablecoins, DeFi, prediction markets like Polymarket, tokenized real world assets, and institutional adoption, matching Dragonfly’s portfolio of Ethena, Polymarket, Rain, and Mesh.
The raise surprised some given market conditions but fits Dragonfly’s contrarian strategy of deploying capital in downturns for long-term returns. No prior public hints were given, though Qureshi’s posts on financial crypto versus non financial projects sparked discussion. Reactions on Crypto Twitter emphasized institutional confidence, fundamentals, and strategic focus, highlighting Dragonfly’s commitment to backing resilient financial crypto applications despite market gloom.
Past Dragonfly Fundraises in Bear Markets
Dragonfly Capital has a history of raising funds during periods of market stress, demonstrating a contrarian strategy. Fund I was raised in 2018 during the ICO winter, with $100 million deployed into early crypto infrastructure and protocols. The broader market was in despair, with Bitcoin dropping from about $20,000 to under $4,000, so reactions were muted, but the fund delivered strong long term returns, establishing Dragonfly’s credibility as a counter cyclical investor.
Fund III was raised in 2022, closing at $650 million just before the Terra/Luna collapse. The fund exceeded its $500 million target and backed projects like Polymarket, Ethena, and Rain, expanding Dragonfly’s portfolio in DeFi and infrastructure. Market sentiment was largely positive, with media framing it as a vote of confidence in crypto despite volatility. Institutional support from Ivy League endowments, KKR, and Tiger Global reinforced Dragonfly’s reputation for successful bear market investing.
Timeline: Dragonfly Capital Venture Fund Closings
Fund I closes at $100M
Dragonfly closes its inaugural $100 million fund during the post-ICO bear market, establishing its early-stage crypto venture footprint.
Fund II closes at ~$225–250M
The firm raises its second fund during a recovering crypto market, expanding capital allocation amid renewed institutional interest.
Fund III closes at $650M
Dragonfly secures $650 million for Fund III shortly before the Terra/Luna collapse and the broader market downturn.
Fund IV closes at $650M
Dragonfly closes Fund IV at $650 million amid a prolonged crypto bear market and venture capital slowdown, reinforcing its counter-cyclical fundraising strategy.
No future fund announced
No additional fundraising timelines have been disclosed. Historically, new funds have aligned with major market cycle transitions.
Dragonfly Capital’s Past Fundraises
Dragonfly Fund I was announced on October 9, 2018, during the ICO winter, a deep bear market with low investor confidence. Bitcoin held around $6,600 with no immediate impact, and Crypto Twitter activity was limited. The fund enabled early investments in projects like Compound, Maker, and dYdX, which later became DeFi staples, establishing Dragonfly as a contrarian investor.
Dragonfly Fund III was announced on April 27, 2022, just weeks before the Terra/Luna collapse. Bitcoin rose slightly on the announcement but fell over 50% in subsequent weeks. Crypto Twitter sentiment was positive, noting institutional backing from Tiger Global, KKR, and Sequoia. The fund supported investments like Polymarket and Ethena, increased Dragonfly’s AUM to $3 billion, and reinforced its contrarian strategy.
Comparison of Dragonfly Fund IV vs. Funds I–III
What Readers Should Watch Next for Dragonfly Capital Fund IV
Following the February 2026 close of Fund IV at $650 million, readers should watch how Dragonfly deploys capital into financial crypto areas such as stablecoins, DeFi, prediction markets, tokenized assets, and agentic payments. Near term catalysts include March 2026 HKMA stablecoin licenses in Asia and potential U.S. regulatory clarity later in 2026. Portfolio updates from Polymarket, Ethena, Rain, and Mesh will indicate execution effectiveness in the bear market.
Key signals include smooth fund deployment, rising LP confidence, and regulatory progress. Risks include limited deal flow, regulatory delays, macro downturns, and competitive pressures. Strong adoption and institutional inflows would validate the fund’s thesis and highlight the resilience of financial crypto in this cycle.
