Authors: E. Johansson, L. Kelly, DL News
Compiled by: Tao Zhu, Golden Finance
Venture capital will make a strong comeback in 2025.
This is according to venture capital firms and market observers interviewed before the New Year.
What will drive the market up? How much capital do investors want to deploy?
Mike Giampapa, general partner at Galaxy Ventures
Mike Giampapa, general partner at Galaxy Ventures
With the establishment of the most cryptocurrency-friendly administration and legislative bodies in U.S. history, it is hard to overstate the impact this could have on the cryptocurrency industry.
With a more favorable SEC, we expect enforcement actions to decrease, regulations to become clearer, and the likelihood of blockchain companies going public in the U.S. to increase.
We are also more optimistic than ever that banks will engage more openly in cryptocurrencies, introduce stablecoin legislation, and broader cryptocurrency market infrastructure bills.
These measures will create the necessary transparency, guardrails, 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 rail is expected to accelerate in 2025.
Fintech companies—ranging from newcomers to established firms, from consumer-facing businesses to B2B enterprises—will increasingly integrate with cryptocurrency rails to offer customers faster, cheaper, and more efficient financial services.
The use 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 crypto payments at checkout, allowing users to use stablecoins as easily as fiat currency.
Alex Botte, partner at Hack VC
By 2025, we expect venture capital in the cryptocurrency and blockchain space to rebound to previous highs.
Galaxy data shows that venture capital is still significantly lagging behind the peak in Q1 2022, when around 1,350 transactions saw investments of approximately $12 billion.
In the third quarter, this figure was $2.4 billion, down 80%, involving 478 transactions (down 65%).
This gap is at least partially due to the ongoing lack of traditional venture capital and institutional investors, especially in the United States.
Private markets, especially early-stage venture capital, often lag behind liquid markets, with major tokens like Bitcoin and Solana recently hitting all-time highs.
However, with the maturation of market cycles and a rebound in investor confidence, we expect venture capital to increase, potentially surpassing previous highs.
With the Trump administration and Congress supporting cryptocurrencies, the clarity of U.S. regulations has improved, potentially attracting more institutional participants than in previous cycles, accelerating venture capital as well.
Robert Le, cryptocurrency analyst
Robert Le, Pitchbook cryptocurrency analyst
We predict that venture capital in the cryptocurrency space will rebound in 2025, with total financing for the year exceeding $18 billion and multiple quarters seeing financing amounts exceeding $5 billion.
This will mark a significant rebound to an annual average of $9.9 billion and a quarterly average of $2.5 billion during the 2023-2024 period.
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 would boost investor confidence and regulatory trust, paving the way for broader institutional involvement.
Their involvement could drive mainstream adoption and attract asset management firms, hedge funds, and sovereign wealth funds into the cryptocurrency space.
The return of generalist venture capital after a period of retreat will focus on showcasing startups that demonstrate traditional metrics like recurring revenue and measurable attractiveness.
This approach could facilitate a broader integration of cryptocurrencies with artificial intelligence, fintech, and traditional finance, emphasizing sustainable growth over speculative investment.
Improvements in global liquidity and declining interest rates will further facilitate venture capital, with token price increases aligning with public and venture markets.
However, this optimistic scenario depends on regulatory stability (especially in the U.S.) and ongoing macroeconomic conditions.
Karl Martin Ahrend, founding partner of Areta
Karl Martin Ahrend, founding partner of Areta
In 2025, we expect the number of M&A and IPOs to surge, 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 the potential for a more cryptocurrency-friendly U.S. Securities and Exchange Commission under new leadership, are bringing optimism for clearer regulations. This clarity, coupled with advancements in security, enhances investor confidence and paves the way for more public offerings and strategic transactions.
Looking ahead, this intersection of institutional interest and favorable regulatory shifts may continue to drive M&A and IPO activity, shaping the future of the industry.