Crypto venture capital funding is on track to reach $18 billion in 2025, with a focus on various areas such as Bitcoin Layer 2 solutions, blockchain infrastructure, AI blockchain, DeFi, Web3, privacy, and tokenization. The head of PitchBook, Robert Lay, shared his optimism for the industry’s future in a recent interview, despite facing challenges in 2024 due to factors such as the collapse of major players and higher interest rates.
Although 2024 started strong with good funding, especially after the approval of a Bitcoin ETF, the momentum slowed down throughout the year. Lay projects that venture capital funding for crypto in 2024 will come in between $11 billion and $12 billion, representing a surge above the 2023 mark but still falling short of expectations.
Looking ahead to 2025, Lay remains positive citing strong market fundamentals, high Bitcoin numbers, more liberalized regulations, and expected declines in interest rates. He predicts that VC funding for crypto could surpass $18 billion in 2025, signaling a rebound in interest and investment compared to 2024, although still below the levels seen in 2021 and 2022.
Going forward, Lay anticipates a shift in focus for crypto VC funding towards real-world applications, with more investments at the application layer. This means a move away from infrastructure towards user-friendly applications in industries like mobility or energy data. Lay emphasizes the importance of user-friendly platforms to drive mass adoption of crypto beyond just the infrastructure.
In terms of specific areas of focus for crypto VC funding in 2025, Lay points out a growing interest in real-world applications and projects, unlike the previous cycle that focused more on infrastructure and speculative sectors like NFTs and Web3. He highlights the development of Bitcoin Layer 2 solutions as a project that received major attention in 2024 but faced technical challenges hindering its progress.
While regulation remains a concern for the industry, Lay notes that the regulatory environment has improved from previous years. He believes that having less restrictive rules from the legislator side in 2025 would benefit the industry, adding that no new legislation is needed in the United States for the upcoming year. However, the approval of more detailed legislation like a bill on stablecoin would provide a significant boost to the industry.
