As a seasoned researcher with a penchant for all things blockchain and digital assets, I find Deng Chao’s predictions intriguing. The potential growth of VC investments in crypto projects, particularly in stablecoin products, RWA tokenization, AI, and infrastructure, aligns perfectly with the burgeoning trend we’ve been witnessing over the past few years.
The increased focus on stablecoins in emerging market economies is especially noteworthy, given their potential to revolutionize banking services for the unbanked population. It’s akin to unlocking the doors of Fort Knox for those who have been shut out for far too long.
However, I must echo Chao’s caution about macro risks that could potentially disrupt this promising landscape. As we all know, in the world of crypto, nothing is ever certain until it’s certain.
On a lighter note, I can’t help but think of the old saying, “Nobody ever got rich from buying and holding fiat.” But perhaps in 2025, with increased VC investments and the right mix of luck and foresight, we might just see some digital millionaires made!
In simpler terms, Deng Chao, head of HashKey Capital – a firm managing institutional assets, foresees an increase in venture capital investment towards cryptocurrency projects by 2025. The reason being, venture capitalists are showing keen interest in stablecoin products, tokenization of real-world assets, artificial intelligence, and infrastructure development within the crypto space.
Chao predicts that a rise in digital asset values in 2024 and the positive impact of Donald Trump’s potential re-election on U.S. politics may lead to an influx of venture capital investment towards cryptocurrency endeavors, as suggested by his statements.
“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.”
Although the CEO remains hopeful about the future, they warned that potential threats on a global scale, such as escalating political conflicts or higher government spending, might lead to greater market instability and unpredictable price fluctuations in the coming year.
Real-world asset tokenization and emerging markets
In 2024, Chao emphasized that stablecoins represented the most solid and convincing application of cryptocurrency. Moreover, Venture Capitalists (VCs) were seen to be progressively concentrating their efforts on the utilization of stablecoins within developing market economies.
Stablecoins, which are tied to the value of the U.S. dollar, are digital assets that more people are adopting as a way to preserve wealth in nations where the national currency is losing value quickly or has stringent restrictions on moving money around.
Dollar-backed stablecoins offer attractive benefits such as lower costs, swift confirmation times, and no necessity for a traditional bank account, making them an effective solution for delivering banking services to individuals who are currently unbanked.
Approximately 1.4 billion individuals worldwide are not able to utilize proper banking facilities as per World Bank estimates.
The main cause of limited banking options in developing nations is often the lack of adequate infrastructure. However, this issue can be addressed effectively through the use of smartphones that have internet connectivity and digital wallet systems based on cryptocurrency.
By the year 2030, it’s predicted that the market for turning real-world assets like government bonds, stocks, company debt, digital currencies, collectibles, and other assets tracked on a blockchain ledger will grow to a staggering $30 trillion.
VC investment set to increase in 2025 but falls short of 2021 peak
According to forecasts by market analyst Infinity Hedge, investments in cryptocurrency venture capital are expected to exceed the amounts from the previous year in 2025. However, these investments are not likely to reach the high levels seen during the 2021 bull market’s peak.
2024 saw crypto firms garnering around 13.6 billion dollars in funding, a significant increase from the 10.1 billion raised in 2023. As per market data platform PitchBook’s projections, venture capital investments in cryptocurrency ventures could potentially surge to a whopping 18 billion dollars by 2025.
According to a recent analysis by Galaxy Digital, it’s expected that venture capital (VC) funding for cryptocurrency projects will increase by around 50% each year until 2025. However, this projected growth may not surpass the record highs achieved in the years 2021 and 2022.
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2025-01-03 20:21