PitchBook analyst Robert Le expects crypto VC funding to be “much much stronger” in 2025 compared to 2024.
“We’re going to see $18 billion or more in venture capital dollars that’s going to be invested into crypto,” Le told CNBC’s Jordan Smith. That’s a 50% increase from 2024, but still less than the roughly $30 billion “that was invested in 2021 and 2022,” he added.
2023 and 2024 recap
Le described 2023 as a challenging year for crypto funding due to the collapse of FTX, erosion of trust, and higher interest rates.
However, 2024 started strong with positive momentum driven by spot Bitcoin exchange-traded funds, or ETFs getting approved.
Despite a slowdown mid-year, “we’re probably going to end [2024] at somewhere between $11 [billion] and $12 billion of invested capital, which is still 10 to 20% more than 2023,” he said.
2025 Funding Expectations
Le’s projection of $18 billion or more in crypto VC funding is a 50% increase compared to 2024. Several factors bode well for the sector, he says. They include:
- Generalist investors are regaining interest, signaling potential large-scale investments.
- Crypto-native funds have significant dry powder but require generalist participation for substantial growth.
- Financial institutions will play a pivotal role by leveraging their trusted relationships with regulators.
Shifting focus
Le anticipates a shift in focus toward application-layer investments, moving beyond infrastructure projects. Examples include:
- Decentralized applications (dApps) targeting non-crypto users with better risk management.
- Use cases leveraging crypto infrastructure for non-crypto sectors such as mobility and energy data.
The analogy of AWS serving as a base for companies like Uber and Airbnb highlights the need for robust applications atop crypto infrastructure to realize its full potential, Le argues.
The benefit of ‘nothing’
Le emphasized the importance of regulatory clarity for the crypto industry’s growth. He expressed cautious optimism about the U.S. regulatory environment in 2025, noting:
- A shift in SEC leadership under the incoming Trump administration could result in fewer enforcement actions.
- Legislative progress, such as stablecoin bills or crypto-specific rules, would be beneficial but is not guaranteed.
- Even a lack of new regulatory actions could be an improvement over the past two years of uncertainty.
Le concluded that a stable regulatory environment, coupled with growing institutional involvement and application-focused investments, could set the stage for significant advancements in the crypto sector in 2025.
But even if the next presidential administration and incoming lawmakers “do nothing,” Le says, “that is already an improvement.”
