Authors: E. Johansson, L. Kelly, DL News; Translated by: Tao Zhu, Jinse Finance
Venture capital is expected to make a strong comeback in 2025.
This is the perspective of venture capital firms and market observers interviewed before the New Year.
What will drive the market up? How much are investors looking to invest?
Mike Giampapa, General Partner at Galaxy Ventures
Mike Giampapa, General Partner at Galaxy Ventures
With the establishment of the most pro-cryptocurrency administration and legislative branches in U.S. history, it is difficult to overstate the potential impact this could have on the cryptocurrency industry.
With a more favorable SEC, we anticipate that enforcement actions will decrease, regulation will become clearer, and the likelihood of blockchain companies going public in the U.S. will increase.
We are also more optimistic than ever that banks will participate more openly in cryptocurrency, introduce stablecoin legislation, and develop 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 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 cryptocurrency rails to provide customers with faster, cheaper, and more efficient financial services.
The use of stablecoins will continue to grow, extending beyond savings and payments to spending use cases. We expect merchant acquirers and card networks to increasingly enable cryptocurrency payments at checkout, allowing users to use stablecoins as easily as fiat currency.
Alex Botte, Partner at Hack VC
By 2025, we anticipate venture capital in the cryptocurrency and blockchain space will rebound to previous highs.
Galaxy data shows that venture capital remains significantly behind the peak levels of Q1 2022, when about 1,350 deals totaled 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, particularly in the U.S.
Private markets, especially early-stage venture capital, often lag behind liquidity markets, with major tokens like Bitcoin and Solana recently hitting all-time highs.
However, as the market cycle matures and investor confidence rebounds, we expect an increase in venture capital, potentially surpassing previous highs.
With the rise of the pro-cryptocurrency Trump administration and Congress, clarity around U.S. regulation has improved, potentially attracting more institutional participants than in previous cycles, with venture capital also accelerating.
Robert Le, Cryptocurrency Analyst
Robert Le, Cryptocurrency Analyst at Pitchbook
We predict that venture capital in the cryptocurrency sector will revive in 2025, with total annual funding exceeding $18 billion and multiple quarters exceeding $5 billion.
This will mark a significant rebound with an average of $9.9 billion annually and $2.5 billion quarterly 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 involvement in cryptocurrency, which in turn would bolster investor confidence and regulatory trust, paving the way for broader institutional participation.
Their participation may drive mainstream adoption and attract asset managers, hedge funds, and sovereign wealth funds into the cryptocurrency space.
Generalist venture capital returning 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 over speculative investments.
Improvements in global liquidity and declining interest rates will further promote venture capital, with token prices rising in line with public and venture markets.
However, this optimistic scenario depends on the stability of regulation (especially in the United States) and the ongoing macroeconomic conditions.
Karl Martin Ahrend, Founding Partner at Areta
Karl Martin Ahrend, Founding Partner at Areta
In 2025, we expect a surge in M&A and IPO activity, 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 firms often lack the expertise to build solutions internally, driving a wave of collaborations and acquisitions.
Meanwhile, political tailwinds, including the possibility of a pro-cryptocurrency stance from the new leadership at the Securities and Exchange Commission, are fostering optimism for clearer regulation. This regulatory clarity, coupled with advancements in security, has bolstered investor confidence and paved the way for more public offerings and strategic deals.
Looking ahead, the intersection of institutional interests and favorable regulatory changes may continue to drive M&A and IPO activity, shaping the future of the industry.