Venture capital

Galaxy Report: Venture Capital in the Cryptocurrency Sector Reaches $11.5 Billion in 2024, Still Below Previous Bull Market Levels

ChainCatcher news, according to CoinDesk, Galaxy Digital stated in a research report on Wednesday that despite the recent rise in digital asset prices, cryptocurrency venture capital (VC) activity remains below previous bull market levels. In 2024, the total capital allocation of venture funds to the crypto industry is $11.5 billion, down from 2023. Galaxy pointed out that in the early rounds of bull markets in 2017 and 2021, VC activity was highly correlated with crypto asset prices, "but in the past two years, despite the rise in cryptocurrencies, VC activity has remained sluggish."There are several reasons for the stagnation in the venture capital market. Galaxy stated that these reasons include a "barbell market," where Bitcoin and its new spot ETF take center stage, while meme coins have "limited marginal net new activity." These meme coins struggle to secure funding and have a "questionable lifespan."The report noted that new projects at the intersection of artificial intelligence (AI) and cryptocurrency are gaining increasing attention, and upcoming regulatory changes may bring more opportunities for stablecoins, decentralized finance (DeFi), and tokenization. The report indicated that some large investors may gain exposure to cryptocurrencies through Bitcoin spot ETFs, "rather than turning to early VC investments."Galaxy stated that the U.S. completed the most transactions and invested the most funds in the fourth quarter. Galaxy added that early-stage deals accounted for 60% of the total investment in the fourth quarter, with stablecoin companies raising the most funds.The report also noted that in 2024, venture capitalists invested a total of $11.5 billion in startups focused on cryptocurrency and blockchain. These funds invested $3.5 billion in 416 deals in the fourth quarter, a quarter-over-quarter increase of 46%.

Pitchbook: It is expected that venture capital in the cryptocurrency sector will double by 2025, reaching $18 billion

ChainCatcher news, according to The Defiant, the venture capital database Pitchbook predicts in its 2025 Corporate Technology Outlook report that venture capital firms will double their investments in cryptocurrency next year, with investments exceeding $18 billion, nearly double the $9.9 billion invested in 2024.Pitchbook analysts state that as comprehensive venture capital firms return to the blockchain and cryptocurrency space, and with the participation of large financial institutions, cryptocurrency-focused venture capital firms will be strengthened; although the $18 billion investment "is far below the $24.7 billion in 2021 and $29.8 billion in 2022, the participation of major traditional financial institutions such as BlackRock, Franklin Templeton, and Goldman Sachs is expected to continue to enhance investor confidence in the cryptocurrency market; in addition to a large client base, these institutions also bring legitimacy to the cryptocurrency industry and have the potential to accelerate mainstream investors' acceptance of digital assets. They also bring expertise and long-term relationships with regulators, which will make them "effective intermediaries, creating a trust environment that cryptocurrency-native companies often find difficult to achieve while complying with regulations."
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