What is the trend of encryption VC in 2025? What do professionals in the industry say?

Authors: E. Johansson, L. Kelly, DL News; Translation: Tao Zhu, Golden Finance

Venture capital will make a strong comeback in 2025.

This is what venture capital firms and market observers said in interviews before the New Year.

What will drive the market up? How much capital do investors hope to invest?

Mike Giampapa, General Partner at Galaxy Ventures

Mike Giampapa, General Partner of Galaxy Ventures

With the establishment of the most crypto-friendly administrative and legislative departments in US history, it is hard to overstate the potential impact this may have on the cryptocurrency industry.

With a more favorable SEC, we expect a reduction in enforcement actions, clearer regulations, and an increased possibility for blockchain companies to go public in the United States.

We are also more optimistic than ever about banks participating in cryptocurrencies in a more open manner, introducing stablecoin legislation, and a more extensive cryptocurrency market infrastructure bill.

These measures will create the necessary transparency, guardrails, and protection for contractors and users throughout the industry.

In this context, the adoption of stablecoins and the use of underlying blockchain as a financial track are expected to accelerate in 2025.

Fintech companies, from startups to existing enterprises, from consumer-facing businesses to B2B enterprises, will increasingly integrate with the cryptocurrency track to provide customers with faster, cheaper, and more efficient financial services.

The application of stablecoins will continue to grow, surpassing savings and payments to expenditure use cases. We expect more and more merchants, acquirers, and card networks to 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 sector to rebound to previous highs.

Galaxy data shows that currently, venture capital is still significantly behind the peak of the first quarter of 2022, when the investment amount of about 1,350 transactions was 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 continued lack of traditional venture capital and institutional investors, especially in the United States.

The private placement market, especially early-stage venture capital, often lags behind the liquidity market. Major tokens such as Bitcoin and Solana recently hit historic highs.

However, with the maturation of the market cycle and the rebound of investor confidence, we expect venture capital to increase, possibly exceeding previous highs.

With the Trump administration and Congress in support of cryptocurrencies coming to power, the clarity of regulation in the United States has improved, which may attract more institutional participants than in previous cycles, and venture capital will also accelerate.

Robert Le, Cryptocurrency Analyst

Robert Le, Pitchbook Cryptocurrency Analyst

We predict that the venture capital in the cryptocurrency field will revive in 2025, with a total financing amount of over 18 billion U.S. dollars for the whole year, and the financing amount for multiple quarters will exceed 5 billion U.S. dollars.

This will mark a significant rebound with an average annual revenue of 9.9 billion USD and quarterly revenue of 2.5 billion USD during the period of 2023-2024.

Macroeconomic stability, institutional adoption, and the return of versatile risk investment may drive this trend.

Heavyweight companies like BlackRock and Goldman Sachs may increase their involvement in cryptocurrencies, which in turn will enhance investor confidence and regulatory trust, paving the way for broader institutional participation.

Their involvement could drive mainstream adoption and attract asset management companies, hedge funds, and sovereign wealth funds into the cryptocurrency space.

After a period of retreat, the versatile venture capital that has returned will shift its focus to start-ups that demonstrate traditional metrics, such as recurring revenue and measurable attractiveness.

This method may promote a broader integration of cryptocurrencies with artificial intelligence, financial technology, and traditional finance, emphasizing sustainable growth rather than speculative investments.

The improvement of global liquidity and the decline in interest rates will further promote venture capital, and the rise in token prices will be in line with the public and risk markets.

However, this optimistic scenario depends on the stability of regulation (especially in the United States) and the continued macroeconomic situation.

Karl Martin Ahrend, Co-founder of Areta

Karl Martin Ahrend, Co-founder of Areta

In 2025, we expect a surge in mergers and acquisitions and IPOs, which will highlight the transformative changes in the industry.

More and more traditional financial institutions are entering the field, seeking to access crypto projects with strong product-market fit. These companies often lack the expertise to build solutions internally, thus driving a wave of partnerships and acquisitions.

Meanwhile, political tailwinds, including the possibility of a crypto-friendly stance from the new leadership at the U.S. Securities and Exchange Commission, are bringing optimism for clearer regulations. This regulatory clarity, coupled with advancements in security, has boosted investor confidence and paved the way for more public offerings and strategic transactions.

Looking ahead, this intersection of institutional interests and favorable regulatory shifts may continue to drive M&A and IPO activities, shaping the future of the industry.