Why VC investments into crypto are seen to hit $25bn in 2025
That's according to Michael Martin, director at Ava Labs' incubator Codebase, who said a perfect storm of bullish signals will incentivise investors to back crypto companies.
He told DL News that factors like Circle's successful public float, booming crypto market, Stripe's acquisition of Privy, Wall Street pouring into blockchain projects, and new rules of the road for digital assets will drive even more investment in the last half of the year.
'People have the proof points to invest with a level of confidence in earlier stage, real-world blockchain companies that they may not have had in the past,' Martin told DL News.
The prediction comes during a week that saw 12 crypto projects raise $121 million, pushing the total amount bagged by industry players this year to $13.2 billion, according to DefiLlama.
That investment is already 40% higher in August this year than all investment into crypto last year. That also puts it on the path to break the $18 billion expected by PitchBook analysts earlier this year.
Martin's prognosis echoes that of Galaxy Venture's Mike Giampapa, who told DL News earlier this summer that he expected crypto startups to secure $25 billion in 2025.
Critical juncture
Investor' optimism comes at a critical juncture for the industry.
The Trump administration's pro-industry tilt has emboldened not just sector players, but also larger financial institutions and banks to increasingly tap into digital assets.
With Trump having rubberstamped the Genius Act in July and more crypto bills coming up for votes on Capitol Hill, the industry is getting the clarity it's clamoured for for years.
That clarity is expected to further fuel the adoption of blockchain technology by traditional financial institutions. Wall Street companies and fintech firms may also see this as an opportunity to follow in Stripe's footsteps and acquire crypto companies to embed their solutions in their services
'You're going to see more of that,' Martin said.
Macroeconomy risks
To be sure, there are clouds on the horizon that risk derailing the investment boom.
Even so, macroeconomic uncertainties — particularly those surrounding US President Donald Trump's tariffs — jeopardise the rally, Martin said.
Other concerns include whether or not public crypto companies like Circle and Coinbase will perform as well as expected.
Martin said that if public crypto companies and leading cryptocurrencies like Bitcoin were to underperform analysts' expectations, that could rattle investors and scare them into tightening their grips around their cheque books.
Apart from the risk of public crypto companies underperforming, there is also a chance that macroeconomic conditions will give investors reason to halt their investment strategies.
For instance, Trump's tariffs against some of the US' closest trading partners combined with jobs growth having stalled this summer have rattled investors. No one knows what will happen next.
'VCs have capital they need to deploy,' Martin said. 'But how are you going to deploy it if you don't know if X, Y and Z is going to happen?'
You're reading the latest installment of The Weekly Raise, our column covering fundraising deals across the crypto and DeFi spaces, powered by DefiLlama.
Eric Johansson is DL News' interim managing editor. Got a tip? Email at eric@dlnews.com.
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