DailySun
PitchBook analyst Robert Le predicts that cryptocurrency venture capital funding will be “significantly stronger” in 2025 compared to 2024.
“We expect to see over $18 billion in venture capital earmarked for crypto,” Le stated in an interview with CNBC’s Jordan Smith. This projection represents a 50% increase from 2024, although it remains below the nearly $30 billion that was injected in 2021 and 2022,” he noted.
Recap of 2023 and 2024
According to Le, 2023 proved to be a difficult year for crypto funding, largely due to the downfall of FTX, a decline in trust, and rising interest rates.
Nevertheless, 2024 began on a positive note, buoyed by the approval of spot Bitcoin exchange-traded funds (ETFs).
Despite a slowdown in the middle of the year, he believes that “we will likely close [2024] with approximately $11 billion to $12 billion in invested capital, which is still a 10 to 20% increase over 2023,” Le remarked.
Funding Expectations for 2025
Le’s forecast of over $18 billion in crypto VC funding indicates a 50% growth relative to 2024. He identifies several promising factors for the sector, including:
- A resurgence of interest from generalist investors, suggesting the potential for large-scale investments.
- Crypto-native funds possess significant capital reserves but need generalist participation to achieve substantial growth.
- Financial institutions are expected to play a crucial role by utilizing their established relationships with regulators.
Focus Shift
Le foresees a change in investment focus toward application-layer projects, moving beyond just infrastructure initiatives. Notable examples include:
- Decentralized applications (dApps) aimed at non-crypto audiences with enhanced risk management features.
- Applications that utilize crypto infrastructure for sectors outside of crypto, such as mobility and energy data.
Le illustrates this point by comparing the cryptocurrency infrastructure to AWS, which serves as a foundation for major companies like Uber and Airbnb, arguing for the necessity of strong applications to unlock crypto’s full potential.
The Advantage of ‘Inaction’
Le stressed the critical role of regulatory clarity in fostering growth within the crypto industry. He expressed a tempered optimism about the regulatory environment in the U.S. come 2025, observing:
- A transition in SEC leadership with the new Trump administration could lead to fewer enforcement actions.
- Legislative advancements, such as stablecoin regulations or crypto-specific laws, would be advantageous but are not guaranteed.
- Even an absence of new regulatory actions could be viewed as progress from the uncertainty experienced over the last two years.
Le concluded that a stable regulatory framework, combined with increasing institutional participation and a shift toward application-focused investments, could lay the groundwork for substantial progress in the crypto sector in 2025.
He added that, even if the forthcoming presidential administration and incoming legislators “do nothing,” it would still represent an improvement.
For the complete interview, refer to the video below.
