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Despite Bitcoin’s (BTC) bull run in 2024, blockchain venture capital (VC) investments did not see a proportional increase, signaling a shift in institutional investment strategies for the cryptocurrency and blockchain startup ecosystem.
According to a CoinTelegraph report on January 18, a January 16 study by Insights For VC revealed a weakening correlation between Bitcoin prices and VC funding since 2023. Despite Bitcoin gaining over 100% in 2024 and reaching new all-time highs, blockchain-related VC activity lagged behind.
VC Investment Trends in 2024
In 2024, blockchain-related VC investments totaled $11.5 billion across 2,153 funding rounds, significantly lower than the peaks of 2021 and 2022. In contrast, the decentralized finance (DeFi) sector accounted for $13.6 billion in investments, with DeFi and blockchain infrastructure emerging as the key growth areas, recording 85% and 57% increases in funding, respectively.
Insights For VC highlighted Bitcoin-based DeFi projects, stablecoins, lending protocols, and perpetual swaps as major drivers of DeFi’s growth in 2024.
Outlook for 2025
Analysts predict a rebound in crypto-related VC investments in 2025. PitchBook estimates that crypto startups could raise $18 billion in new capital, representing a 32–56% increase from 2024 levels. Similarly, Galaxy Digital projects a 50% year-over-year increase in crypto VC activity for 2025.
However, surpassing the $30 billion investment peak of 2022 remains unlikely. Galaxy Research noted that while Bitcoin prices and VC funding showed a strong correlation from 2020 to 2022, this relationship weakened post-2023.
Challenges and Opportunities
Bloomberg described renewed interest in crypto as a sign of recovery from the “FinTech winter,” which was exacerbated by high interest rates and regulatory crackdowns. Amias Gerety, a partner at QED Investors, identified stablecoins as a key area of interest for cross-border payments, which could attract increased investor attention.
As Bitcoin prices rise and new narratives emerge, the crypto industry may see a more positive impact on VC investments in 2025, signaling a potential shift in the market’s growth dynamics.
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