According to Deng Chao, CEO of institutional asset manager HashKey Capital, crypto projects are expected to attract more capital from venture capitalists (VCs) in 2025. These VCs are eyeing stablecoin products, real-world asset (RWA) tokenization, artificial intelligence, and infrastructure.
Chao attributes the increased interest in crypto projects from VCs to the growing digital asset valuations in 2024 and the favorable macro environment driven by stimulative US policies. He notes that:
As we enter into a supportive macro environment driven by stimulative US policies and the formalization of crypto regulatory frameworks, these macro tailwinds are set to drive more VC investments heading into 2025.
Despite the optimistic outlook, Chao cautions that macro risks such as geopolitical tensions or increased deficit spending could increase price volatility and uncertainty in the new year.
Chao highlights the growth of stablecoins as a strong use case for crypto in 2024. VCs are increasingly focused on stablecoin usage in emerging market economies, where dollar-pegged stablecoins are being used as a store of value by individuals with rapidly depreciating local fiat currencies or strict capital controls.
- Stablecoins as a Store of Value: Dollar-pegged stablecoins offer cheaper fees, near-instant finality times, and no bank account required, making them an attractive method for providing banking services to the unbanked. According to the World Bank, approximately 1.4 billion people lack access to adequate banking services.
- Real-World Asset Tokenization: The real-world asset tokenization sector, which includes government securities, stocks, corporate bonds, stablecoins, collectibles or any other asset tokenized on a blockchain ledger, is projected to reach up to $30 trillion by 2030.
Market analyst Infinity Hedge predicts that crypto VC investment in 2025 will surpass last year’s levels but won’t approach the peak recorded during the 2021 bull market. Crypto companies raised approximately $13.6 billion in 2024 compared to $10.1 billion in 2023.
- Projected Growth: According to market data platform PitchBook, VC investments in crypto projects are projected to grow to $18 billion in 2025.
- Forecasted Year-Over-Year Growth: A recent report from Galaxy Digital also forecasted VC investments in crypto projects to grow 50% year-over-year in 2025 but will fail to reach highs established in 2021-2022.
As the crypto market continues to evolve, it’s essential for investors and entrepreneurs to stay informed about the latest trends and developments. With the projected growth of VC investments in crypto projects, now is an excellent time to explore opportunities in this rapidly growing space.
Key Takeaways
- Crypto projects are expected to attract more capital from VCs in 2025.
- Stablecoin products, real-world asset tokenization, artificial intelligence, and infrastructure are key areas of focus for VCs.
- Increased digital asset valuations and favorable macro environments will drive VC investments in 2025.
- Macro risks such as geopolitical tensions or increased deficit spending could increase price volatility and uncertainty in the new year.
By staying informed about the latest trends and developments in the crypto market, investors and entrepreneurs can make informed decisions and capitalize on opportunities in this rapidly growing space.
