PitchBook analyst Robert Le anticipates that crypto venture capital funding will be “much much stronger” in 2025 compared to 2024.
“We expect to see $18 billion or more in venture capital investments directed toward crypto,” Le shared with CNBC’s Jordan Smith. This represents a 50% increase from 2024, although it remains below the approximately $30 billion invested in 2021 and 2022,” he added.
Recap of 2023 and 2024
Le noted that 2023 was a tough year for crypto funding due to the fallout from FTX, diminishing trust, and rising interest rates.
Nevertheless, 2024 began on a positive note with momentum fueled by the approval of spot Bitcoin exchange-traded funds (ETFs).
Even with a slowdown in the middle of the year, “we’re likely to conclude [2024] with somewhere between $11 billion and $12 billion of invested capital, which is still 10 to 20% higher than 2023,” he stated.
Anticipated Funding in 2025
Le’s forecast of $18 billion or more in crypto VC funding marks a 50% rise compared to 2024. He identifies several positive indicators for the sector, including:
- Renewed interest from generalist investors, pointing to the potential for substantial investments.
- Crypto-native funds hold considerable dry powder but require participation from generalist investors for significant expansion.
- Financial institutions are set to play a crucial role by utilizing their trusted relationships with regulators.
Change in Focus
Le predicts a move toward application-layer investments, shifting focus beyond infrastructure projects. Some examples include:
- Decentralized applications (dApps) aimed at non-crypto users that offer improved risk management.
- Use cases that utilize crypto infrastructure for non-crypto industries such as mobility and energy data.
Le argues that the analogy of AWS providing a foundation for companies like Uber and Airbnb illustrates the necessity for strong applications built on crypto infrastructure to unleash its full potential.
The Advantage of ‘Nothing’
Le highlighted the critical role of regulatory clarity for the expansion of the crypto industry. He expressed cautious optimism regarding the U.S. regulatory landscape in 2025, noting:
- A potential change in SEC leadership with a new Trump administration could lead to fewer enforcement actions.
- Legislative advancements, such as stablecoin regulations or crypto-specific laws, would be advantageous but aren’t guaranteed.
- Even the absence of new regulatory actions could be seen as an improvement compared to the past two years of ambiguity.
Le wrapped up by stating that a stable regulatory framework, along with increasing institutional engagement and application-centered investments, could pave the way for significant progress within the crypto sector in 2025.
However, even if the next presidential administration and incoming legislators “do nothing,” Le asserts, “that in itself is already a step up.”
For the complete interview, see below.
