Article reproduced from: Golden Finance
Authors: E. Johansson, L. Kelly, DL News
Compiled by: Tao Zhu, Golden Finance
Venture capital will make a strong comeback in 2025.
This is what venture capital firms and market observers said before the New Year.
What will drive the market up? How much are investors willing to put in?
Mike Giampapa, General Partner at Galaxy Ventures
Mike Giampapa, General Partner at Galaxy Ventures
With the establishment of the most supportive executive and legislative branches for cryptocurrency in American history, it's hard to overstate the potential impact this could have on the cryptocurrency industry.
With a more favorable SEC, we expect enforcement actions to decrease, regulation 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 with cryptocurrencies, introduce stablecoin legislation, and create broader cryptocurrency market infrastructure legislation.
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 financial rails are expected to accelerate in 2025.
Fintech companies—from newcomers to established enterprises, from consumer-facing businesses to B2B companies—will increasingly integrate with the cryptocurrency space to provide customers with faster, cheaper, and more efficient financial services.
The application of stablecoins will continue to grow, expanding beyond savings and payments to spending use cases. We expect merchant acquirers 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 sectors to rebound to previous highs.
Galaxy data shows that venture capital still lags significantly behind the peak in Q1 2022, when approximately 1,350 transactions accounted for about $12 billion in investments.
In the third quarter, this figure was $2.4 billion, down 80%, involving 478 transactions (a 65% decline).
This gap is at least partially due to the ongoing lack of traditional venture capital and institutional investors, especially in the U.S.
Private markets, particularly early-stage venture capital, often lag behind liquid markets, with major tokens like Bitcoin and Solana recently hitting all-time highs.
However, as market cycles mature and investor confidence rebounds, we expect venture capital to increase, potentially surpassing previous highs.
With the rise of the cryptocurrency-supporting Trump administration and Congress, the clarity of U.S. regulation has improved, potentially attracting more institutional participants than previous cycles, and venture capital will accelerate.
Robert Le, cryptocurrency analyst
Robert Le, Pitchbook cryptocurrency analyst
We predict that venture capital in the cryptocurrency space will recover in 2025, with total funding for the year exceeding $18 billion and multiple quarters of funding exceeding $5 billion.
This will mark a significant rebound, averaging $9.9 billion annually and $2.5 billion quarterly during the period of 2023-2024.
Macroeconomic stability, institutional adoption, and the return of generalist venture capital may drive this trend.
Heavyweights like BlackRock and Goldman Sachs may increase their involvement in cryptocurrencies, which in turn would bolster investor confidence and regulatory trust, paving the way for broader institutional participation.
Their involvement could drive mainstream adoption and attract asset management firms, hedge funds, and sovereign wealth funds into the cryptocurrency space.
Returning generalist venture capital after a period of retreat will focus on showcasing startups with traditional metrics such as recurring revenue and measurable appeal.
This approach may facilitate a broader integration of cryptocurrency with artificial intelligence, fintech, and traditional finance, emphasizing sustainable growth rather than speculative investment.
Improvements in global liquidity and falling interest rates will further promote venture capital, with rising token prices 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 at Areta
Karl Martin Ahrend, Founding Partner at Areta
In 2025, we expect the number of mergers and acquisitions and IPOs to surge, highlighting the transformative shift 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 possibility of a more cryptocurrency-friendly U.S. Securities and Exchange Commission under new leadership, are fostering optimism for clearer regulation. This clarity in regulation, coupled with advancements in security, boosts investor confidence, paving the way for more public offerings and strategic transactions.
Looking ahead, this intersection of institutional interest and favorable regulatory shifts may continue to drive mergers, acquisitions, and IPO activities, shaping the future of the industry.