According to Deng Chao, CEO of institutional asset manager HashKey Capital, crypto projects are expected to attract more capital from venture capitalists in 2025. These VCs are eyeing stablecoin products, real-world asset (RWA) tokenization, artificial intelligence, and infrastructure.
Increased Digital Asset Valuations and Macroeconomic Tailwinds
Chao attributed the potential increase in VC investment to the increased digital asset valuations in 2024 and the tailwinds from the re-election of Donald Trump in the United States. He noted that:
"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."
Macro Risks and Price Volatility
Despite the optimistic outlook, Chao cautioned that macro risks, including geopolitical tensions or increased deficit spending, could increase price volatility and uncertainty in the new year.
Real-World Asset Tokenization and Emerging Markets
Chao added that stablecoins were the strongest proven use case for crypto in 2024, and VCs were increasingly focused on stablecoin usage in emerging market economies. Dollar-pegged stablecoins are real-world tokenized assets that are increasingly used as a store of value by individuals in countries with rapidly depreciating local fiat currencies or strict capital controls.
The Growth of the Stablecoin Sector
According to Chao, the growth of the stablecoin sector is driven by its use cases in emerging markets. The World Bank estimates that 1.4 billion people lack access to adequate banking services. This lack of banking services is primarily due to insufficient infrastructure in developing countries.
However, with smartphones and internet access becoming increasingly widespread, crypto wallets have become a viable method of providing banking services to the unbanked. Dollar-pegged stablecoins offer cheaper fees, near-instant finality times, and no bank account required, making them an attractive option for individuals in emerging markets.
The Real-World Asset Tokenization Sector
The real-world asset tokenization sector is projected to reach up to $30 trillion by 2030. This sector includes government securities, stocks, corporate bonds, stablecoins, collectibles, or any other asset tokenized on a blockchain ledger.
VC Investment Set to Increase in 2025 but Falls Short of 2021 Peak
Market analyst Infinity Hedge predicted that crypto VC investment in 2025 would surpass last year’s levels but wouldn’t approach the peak recorded during the 2021 bull market. Crypto companies raised approximately $13.6 billion in 2024 compared to $10.1 billion in 2023.
According to market data platform PitchBook, VC investments in crypto projects are projected to grow to $18 billion in 2025. A recent report from Galaxy Digital also forecasted VC investments in crypto projects to grow 50% year-over-year in 2025 but will fail to reach highs established in 2021-2022.
The Future of Crypto Venture Capital Investment
While the outlook for crypto venture capital investment is optimistic, Chao cautioned that macro risks could increase price volatility and uncertainty in the new year. Nevertheless, the growth of the stablecoin sector and the real-world asset tokenization sector are expected to drive more VC investments in 2025.
As the crypto market continues to evolve, it will be interesting to see how VC investment trends unfold in 2025. Will we see a repeat of the 2021 bull market, or will the industry settle into a more sustainable growth trajectory? Only time will tell.
References
- Silicon Valley Bank: Crypto VC Investment vs. VC Investment in Other Tech Sectors, 2023-2024
- Galaxy Digital: The Growth of the Stablecoin Sector
- RWA.xyz: Total RWA Value, Including Stablecoins
Related Articles
- From RWA Boom to Bitcoin Yields: Top Crypto Trends to Watch in 2025
- The Secret of Pitching to Male VCs: Female Crypto Founders Blast Off
Subscribe to our Crypto Biz newsletter for the latest insights on business trends in blockchain and crypto. Gain valuable insights to navigate the market and spot financial opportunities.
Subscribe Now
By subscribing, you agree to our Terms of Service and Privacy Policy.
