2024’s Bitcoin price surge didn’t lead to an equivalent increase in venture capital investment for cryptocurrency and blockchain companies, indicating that institutional investors are becoming more discerning in their approach towards such startups, rather than blindly pouring money into them.
As a crypto investor, I’ve noticed that the remarkable over 100% growth in Bitcoin’s value last year, as per the January 16 report by Insights For VC, would logically lead to an upward trend in venture capital investments in blockchain technology. This is because increased interest and adoption of Bitcoin typically boost the entire blockchain ecosystem.
Starting from January 2023, “this correlation has noticeably lessened,” the report stated. “Meanwhile, Bitcoin has hit record peaks, but venture capital investment activity has had difficulty matching its momentum.
According to the report, the current trends suggest that Bitcoin is more favored in the market, which might make other cryptocurrency investment options less visible.
2024 was a less active year for me as a crypto investor when it comes to blockchain funding rounds, with only 2,153 rounds amounting to $11.5 billion. This falls significantly short of the levels seen in 2021 and 2022. Interestingly, the DeFi Report reported a total funding of $13.6 billion for the year, which is slightly higher than my own observations.
Last year, decentralized finance (DeFi) and blockchain infrastructure stood out as significant highlights. Funding in these areas increased by an impressive 85% and 57% respectively, as reported by Insights For VC.
According to the report, the expansion was primarily fueled by applications related to decentralized finance (DeFi) that utilize Bitcoin, such as stable digital currencies, loan systems, and continuous swap contracts.
Rebound ahead?
2025 is anticipated to see a resurgence in cryptocurrency investment deals, primarily due to increasing crypto asset prices and evolving market narratives.
Based on PitchBook’s data, it’s estimated that cryptocurrency ventures could rake in approximately $18 billion in new funds this year, representing an increase of anywhere between 32% and 56% compared to the investment seen in 2024, depending on the point of reference.
Meanwhile, Galaxy Digital reported that crypto VC deals would grow 50% year-over-year in 2025.
On the other hand, both predictions indicate that the funding will fail to reach the 2022 peak, which saw over $30 billion in allocation, as reported by Galaxy Digital.
According to Bloomberg, a resurgence in cryptocurrency investment signals the conclusion of the “fintech winter,” a period characterized by reduced funding deals across the board, resulting from increased interest rates and tighter regulations. In simpler terms, the growing interest in crypto indicates that the challenging times for fintech companies (often referred to as the ‘fintech winter’) may be over.
Amias Gerety, a partner at QED Investors, mentioned to a publication that the potential of stablecoins in international transactions might be the most intriguing application of blockchain technology and one that could draw significant investor interest.
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2025-01-17 22:38