Venture capital funding in the cryptocurrency sector is projected to hit $18 billion by 2025, according to estimates from Robert Le, an analyst at PitchBook. This forecast represents a 50% increase compared to 2024, signaling renewed interest in the sector following Bitcoin’s resurgence and anticipated regulatory support under Donald Trump’s administration.
Speaking to CNBC, Le highlighted that the approval of Bitcoin ETFs in early 2024 fueled a positive sentiment among investors. While funding slowed during the summer, the outlook for 2025 remains optimistic due to several key factors:
- Favorable Regulatory Environment: Trump’s administration is expected to introduce more flexible policies towards blockchain technology.
- Stable Macroeconomic Conditions: An improved economic landscape is encouraging venture capitalists to re-enter the market.
- Record-High Cryptocurrency Values: Assets such as Solana and Bitcoin have reached or surpassed their all-time highs, boosting confidence in the market.
“Our prediction is that we’ll see $18 billion or more in venture capital funding in 2025, marking a significant increase compared to the previous year,” Le stated.
Despite the optimism, the projected figure for 2025 remains notably lower than the $33 billion invested in 2021, a historic peak for the sector. According to Universe Research, over $22 billion was allocated to fundraising rounds that year, with cryptocurrency startups capturing nearly 5% of global venture capital.
China Tightens Control Over Crypto Assets with New Currency Rules
China’s foreign exchange regulator has implemented stricter rules requiring banks to monitor and report risky activities linked to crypto assets. According to the South China Morning Post, these measures are expected to make it even harder for residents to acquire digital assets.
The regulations mandate that banks oversee suspicious transactions, such as cross-border gambling, operations with underground banks, and illegal financial activities involving cryptocurrencies. They must also track the identities of participants, the sources of their funds, and the frequency of their transactions.
Liu Zhengyao, a lawyer at ZhiHeng Law Firm, explained that these rules strengthen the legal basis for punishing cryptocurrency trading, making it nearly impossible to bypass the country’s currency restrictions. Zhengyao noted that even using yuan to purchase cryptocurrencies and then converting them into foreign currencies would be considered a cross-border activity under these regulations.
China banned cryptocurrency transactions in 2019, citing concerns over energy consumption and greenhouse gas emissions from mining activities. However, despite its stringent stance, China remains the second-largest Bitcoin holder globally, with approximately 194,000 BTC valued at $18 billion, largely stemming from confiscated assets linked to illicit activities.
Survey: Optimism in Stock Markets Contrasts with Political and Global Concerns for 2025
A recent Gallup survey revealed that 66% of Americans expect the stock market to post gains in 2025, reflecting a significant increase in economic optimism compared to previous years.
However, this optimism does not extend to political or international realms. Only 23% anticipate positive political cooperation within the country, and just 32% foresee a peaceful global environment.
The survey, conducted between December 4 and 15, included 100,000 participants and showed a notable rise in stock market confidence compared to 2023—a year marked by high inflation and low economic trust. Despite this, expectations for political stability and global peace remain low, albeit slightly improved from earlier polls.
Stock market optimism could impact cryptocurrencies like Bitcoin, which historically exhibit some correlation with stock indices. According to Newhedge, Bitcoin’s performance shows a volatile relationship with the S&P 500, while also being influenced by tech stock movements.
However, rising international uncertainty could pose challenges. During high-tension events, such as armed conflicts, Bitcoin prices have seen abrupt declines. For instance, Bitcoin lost 8% in an hour following an Iran-Israel attack in 2023 and dropped 11% at the onset of Russia’s invasion of Ukraine in 2022.
By Radoslav Jokic
Updated on 17th January 2025