Author: E. Johansson, L. Kelly, DL News; Translated by: Tao Zhu, Golden Finance
Venture capital will return strongly in 2025.
That's according to venture capital firms and market watchers interviewed before the new year.
What will drive the market higher and how much money will investors want to invest?
Mike Giampapa, General Partner, Galaxy Ventures
Mike Giampapa, General Partner, Galaxy Ventures
With the creation of the most pro-cryptocurrency executive and legislative branches in U.S. history, it’s hard to overstate the impact this could have on the cryptocurrency industry.
With a more supportive SEC, we expect to see fewer enforcement actions, more regulatory clarity, and an increase in the likelihood of blockchain companies going public in the U.S.
We are also more optimistic than ever that banks will engage more openly with cryptocurrencies, introduce stablecoin legislation, and support broader cryptocurrency market infrastructure bills.
These measures will create necessary transparency, safeguards, and protections for contractors and users across the industry.
Against this backdrop, the adoption of stablecoins and the use of underlying blockchain as a financial track are expected to accelerate by 2025.
Fintech companies—from newcomers to established firms, from consumer-facing businesses to B2B enterprises—will increasingly integrate with cryptocurrency tracks to provide faster, cheaper, and more efficient financial services to customers.
The application of stablecoins will continue to grow, expanding beyond savings and payments to spending use cases. We expect merchant acquiring institutions and card networks to increasingly enable cryptocurrency payments at checkout, allowing users to utilize stablecoins as easily as fiat currency.
Alex Botte, partner at Hack VC
By 2025, we anticipate that venture capital in the cryptocurrency and blockchain sectors will rebound to previous highs.
Galaxy data shows that venture capital is still significantly lagging behind the peak in Q1 2022, when investments of approximately $12 billion were made across around 1,350 transactions.
In the third quarter, this figure was $2.4 billion, down 80%, involving 478 transactions (a decrease of 65%).
This gap is at least partly due to the ongoing lack of traditional venture capital and institutional investors, especially in the U.S.
The private market, particularly early-stage venture capital, often lags behind the liquidity market, with major tokens like Bitcoin and Solana recently reaching all-time highs.
However, as market cycles mature and investor confidence rebounds, we expect venture capital to increase, potentially surpassing previous highs.
With the Trump administration and Congress supporting cryptocurrencies, clarity in U.S. regulations has improved, potentially attracting more institutional participants than in previous cycles, and venture capital will accelerate.
Robert Le, cryptocurrency analyst
Robert Le, Pitchbook cryptocurrency analyst
We predict that venture capital in the cryptocurrency sector will recover in 2025, with total financing for the year exceeding $18 billion and multiple quarters exceeding $5 billion.
This will mark a significant rebound during the period of 2023-2024, with an annual average of $9.9 billion and a quarterly average of $2.5 billion.
Macroeconomic stability, institutional adoption, and the return of generalist venture capital may drive this trend.
Heavyweights like BlackRock and Goldman Sachs may increase their participation in cryptocurrencies, which in turn will boost investor confidence and regulatory trust, paving the way for broader institutional participation.
Their participation may drive mainstream adoption and attract asset management firms, hedge funds, and sovereign wealth funds into the cryptocurrency space.
Generalist venture capital returning after a period of withdrawal will focus on showcasing startups with traditional metrics (such as recurring revenue and measurable attractiveness).
This approach may foster a broader integration of cryptocurrencies with artificial intelligence, fintech, and traditional finance, emphasizing sustainable growth rather than speculative investments.
Improvements in global liquidity and declines in interest rates will further promote venture capital, while token price increases will align with public and risk markets.
However, this optimistic scenario depends on the stability of regulations (especially in the United States) and the ongoing macroeconomic conditions.
Karl Martin Ahrend, founding partner of Areta
Karl Martin Ahrend, founding partner of Areta
In 2025, we expect a surge in M&A and IPO activity, highlighting the transformative shifts in the industry.
Traditional financial institutions are increasingly entering the space, seeking exposure to crypto projects with strong product-market fit. These companies often lack the expertise to build solutions in-house, driving a wave of collaboration and acquisitions.
Meanwhile, political tailwinds, including a potentially crypto-friendly U.S. Securities and Exchange Commission under new leadership, are fostering optimism for clearer regulations. This clarity, along with advancements in security, enhances investor confidence, paving the way for more public offerings and strategic transactions.
Looking ahead, this intersection of institutional interests and favorable regulatory shifts may continue to drive M&A and IPO activity, shaping the future of the industry.