Declining interest rates influence venture capital funding in crypto startups in ways that many people did not expect. When rates go down, investors hunt for higher returns, so they look to crypto startups with new technologies and strong growth potential. This shift leads to bigger venture capital investments in blockchain-based startups. The impact of increased regulatory clarity on DeFi and blockchain-based ventures also changes the landscape. Clear rules help these projects gain trust and attract more capital, which explains why venture capital investments in crypto recovered after the 2023 downturn. PitchBook predictions show that investors feel more confident when they see regulators provide guidelines that reduce uncertainty and potential legal trouble.
Venture capital funding in crypto startups reached about 4.9% of the total $279 billion in global venture capital investments in 2024, according to the DeFi Report data. This share may seem small, but it represents $13.6 billion that flowed into blockchain-based ventures. People remember that the industry still trails the big year of 2021, when crypto startups secured $32.4 billion, yet many market watchers see progress. Crypto VC fundraising shows signs of growth that may extend into 2025 and beyond. Many investors still believe in the power of layer-1 blockchains, tokenization platforms, and the development of stablecoin issuer models. Some folks compare crypto VC funding peaks from 2021 to current market trends to see how much the space has stabilized.
PitchBook predicts that crypto startups might attract over $18 billion in capital in 2025. Galaxy Research thinks this surge will happen because lower rates make money cheaper to borrow and invest, and clearer regulations allow more funds to flow into blockchain projects. How Bitcoin-backed DeFi platforms are reshaping lending and stablecoins is also part of this growth. These platforms serve a niche where traditional banks struggle. Investors see that real-world assets (RWA) now appear in DeFi, and many stablecoin issuers use these assets to maintain value. This approach adds credibility and encourages more venture capital in the space. When new platforms use community-driven models, it helps spread risk while offering governance roles to users.
Many people have watched the emergence of projects like Monad Labs and Berachain, which develop modular blockchain networks for layer-1 smart contract development. Monad Labs raised $225 million, while Berachain secured $100 million for its own modular blockchain development platform. These moves caught the eye of venture capitalists who want to back the next big thing. Analysts are analyzing the 2024 VC fundraising surge for new blockchain infrastructure projects and see that these types of investments hold strong growth potential. Another important example is Babylon, which focuses on Bitcoin staking protocol improvements, and Securitize, a tokenization platform that raised $47 million from major firms such as BlackRock. Their expansions show the role of regulation in boosting trust for tokenization platforms and their adoption in traditional finance.
Avalon Labs also earned attention by raising $10 million in a Series A round led by Framework Ventures and supported by Kenetic Capital, SNZ Capital, and others. Avalon Labs aims to build a Bitcoin-backed DeFi ecosystem with stablecoins, lending, and savings accounts that let users tap into Bitcoin’s liquidity. It has more than 20,000 Bitcoin currently serviced, which points to a steady user base. The startup’s USDa stablecoin holds over $466 million in total value locked. Venture capitalists often see these stablecoins as a path to expand DeFi. They compare them to top decentralized exchange (DEX) projects attracting VC funding on the BNB Chain. Binance Labs also made moves in this space by backing Thena, which is a decentralized exchange and liquidity protocol on the BNB Chain. Thena’s ve(3,3) tokenomics model encourages long-term participation by letting people lock tokens for governance rights. Thena’s total value locked is over $63 million, and it plans cross-chain operations and the addition of more DeFi services.
Usual, a French startup, raised $10 million in Series A funding led by Binance Labs and Kraken Ventures. It aims to offer stablecoins backed by real-world assets. DefiLlama states that Usual USD (USD0) holds more than $1.7 billion in total value locked. This stablecoin issuer follows a community-driven model in which 90% of its native token goes to users. This setup allows profit-sharing and more involvement from token holders. Many see strategies for stablecoin issuers looking to leverage real-world asset (RWA) backing as a strong approach. People say that this structure can reduce risk compared to systems that depend on banks for collateral. Such projects also attract venture capital funding from firms like Coinbase Ventures and Ondo, which see potential for stablecoins linked to real-world assets.
Accountable, a crypto data startup, raised $2.3 million in seed funding from MitonC and Zee Prime Capital. The company uses zero-knowledge proofs to let borrowers and lenders share real-time data about assets and liabilities without revealing details to the public. This approach appeals to institutional clients who value privacy and trust. Exploring cryptographic data-sharing protocols for institutional crypto lending is a focus for many new projects. The platform says it has processed $2 million in Bitcoin loans so far. The rise of these privacy-focused tools may push further growth in DeFi because many large market makers want to protect sensitive trade info.
The role of zero-knowledge proofs in enhancing privacy for crypto borrowers and lenders has expanded beyond small pilot projects. Many companies see how these proofs can keep trade secrets hidden yet still prove creditworthiness. This approach could become a key technology for large banks if they move deeper into DeFi. Some people believe that these developments will help the crypto market reach the $18 billion investment mark that PitchBook predictions mention for 2025.
The year 2024 was massive for Bitcoin in particular. It stood out as the top investment asset, climbing above $100,000 at one point. Several experts believe that the launch of Bitcoin ETFs drove a large amount of that growth. BlackRock launched the iShares Bitcoin Trust ETF (IBIT), which pulled in about $50 billion over 12 months. The success of that ETF launch showed how mainstream investors crave simple ways to access crypto markets. Ethereum ETFs also arrived later in the year, picking up $2 billion in half a year. That gave Ethereum a small boost, although Ether did not rise as much as Bitcoin. Some people call these the key drivers behind Bitcoin’s bullish performance and record-high ETF inflows.
Even though December saw profit-taking and slower price gains, Bitcoin still outperformed almost every other asset class during 2024. The S&P 500 rose about 23% that year, powered by AI stocks and stable economic reports, while Bitcoin soared by more than double its value from the start of the year. People who track the effects of the halving event note that reduced mining rewards tightened supply, which can drive prices higher, but it also made mining stocks more volatile. Mara Holdings and Riot Platforms saw double-digit losses for the year because they rely on block rewards to stay profitable. How the halving event affects Bitcoin mining stocks and profitability is a major topic for analysts.
MicroStrategy, a company known for holding a large amount of Bitcoin, showed how that strategy can pay off. Its shares jumped about 388% during 2024, partly because Bitcoin’s rise boosted its balance sheet. The company even got listed on the Nasdaq 100, which shows how mainstream investors no longer see Bitcoin as a fringe asset. Yet MicroStrategy reported some losses near the end of the year due to Bitcoin’s choppy price. Coinbase also rallied 47%, and Robinhood soared around 200%. Investors who studied why venture capital investments in crypto recovered after the 2023 downturn observed that new products, like Bitcoin-backed DeFi platforms and regulatory perspectives on tokenization platforms, fueled a sense of optimism.
Many experts expect that 2025 will bring more deals and capital inflows. Predictions for crypto VC activity in 2025 and beyond suggest that regulatory clarity will continue to improve, which opens the door for more institutional investors. Developers will likely embrace advantages of modular blockchain networks for layer-1 smart contract development. They can scale their projects, reduce transaction fees, and promote secure environments for large-scale adoption. More stablecoin issuers will leverage real-world assets to improve their reserves, while decentralized exchange (DEX) projects on networks like the BNB Chain will keep attracting new users with liquidity protocol incentives.
Some investors wonder if the crypto market will ever match the all-time high of $32.4 billion in VC funding from 2021. Comparing crypto VC funding peaks from 2021 to current market trends, many see that the industry has matured in terms of regulation, enterprise adoption, and the emergence of real-world asset support. Others see further growth tied to cross-chain operations, since traders want simpler ways to move assets across different blockchains. Analysts from Galaxy Research note that crypto VC fundraising has lagged behind overall crypto market performance, which means there could be a catchup effect if market conditions remain stable.
People tracking the numbers also notice that Ethereum’s price did not grow as quickly as Bitcoin’s, even though it saw a jump after the introduction of Ethereum ETFs. Still, Ethereum’s total value locked in DeFi remains large, and it keeps attracting attention from developers who want to build dApps and tokenization projects. Investors who follow the halving event wonder if 2025 will be as dramatic as 2024, but many feel that the path is set for strong capital inflows due to declining interest rates and regulatory certainty. The surge of stablecoin issuers that hold real-world assets may also reshape the credit markets within crypto, since these companies can attract both retail users and large funds that want safe digital assets.
These developments support the idea that venture capital funding in crypto will remain a focus in the next 12 months. Many see that lower borrowing costs, clearer legal guidance, and new infrastructure projects form the right mix for a boom in blockchain-based startups. Entrepreneurs, developers, and investors have learned lessons from the 2021 peak and the 2023 downturn, so they are approaching new deals with more caution and better strategies. They believe that how declining interest rates influence venture capital funding in crypto startups will remain a key question, as these rates impact everything from personal loans to corporate borrowing. Regulators also watch closely, especially when stablecoin issuers use real-world assets.
By looking at the industry’s progress, people see that the DeFi ecosystem is not just hype. Projects like Avalon Labs and Usual use Bitcoin-backed lending, stablecoins linked to real-world assets, and community-driven models that distribute tokens to users. That approach helps push adoption, and it also reveals how the space can keep evolving. Some experts think zero-knowledge proofs will become more important for financial privacy. The days of trust in crypto might shift toward verification-based systems, which reduces risk for participants. This transformation could help drive the market to new levels of capital inflow and user adoption, especially when major firms like BlackRock and other large asset managers continue to show support through ETF launches.
Venture capital investments may keep flowing into cutting-edge areas, such as modular blockchain development, decentralized exchange designs, or cryptographic data-sharing platforms for institutional clients. More watchers see that the industry is moving beyond quick speculation toward building stronger foundations for the future. As these projects gain more visibility, their potential to reshape finance becomes clearer. Many observers expect that 2025 will mark another big step forward, thanks to regulatory clarity, lower interest rates, and rising consumer interest in digital assets.
