In a recent interview with Cointelegraph, Deng Chao, CEO of institutional asset manager HashKey Capital, shared his optimistic outlook on the crypto market for 2025. According to Chao, venture capitalists (VCs) will continue to attract more capital from investors, driven by the growing interest in stablecoin products, real-world asset tokenization, artificial intelligence, and infrastructure.
Supportive Macro Environment Drives VC Investments
Chao attributes the expected increase in VC investment to the favorable macro environment that is emerging in 2025. The CEO notes that the tailwinds from the reelection of Donald Trump in the United States will contribute to a supportive macro environment, driving more VC investments into crypto projects.
"As we enter into a supportive macro environment driven by stimulative US policies and the formalization of crypto regulatory frameworks, these macro tailwinds are set to drive more VC investments heading into 2025," Chao said.
Despite the optimistic outlook, Chao cautioned that macro risks, including geopolitical tensions or increased deficit spending, could increase price volatility and uncertainty in the new year. It is essential for investors to be aware of these potential risks and adjust their strategies accordingly.
Real-World Asset Tokenization Gains Momentum
One of the strongest use cases for crypto in 2024 was stablecoins, according to Chao. VCs are increasingly focused on stablecoin usage in emerging market economies, where dollar-pegged stablecoins are being used as a store of value by individuals in countries with rapidly depreciating local fiat currencies or strict capital controls.
The growth of the stablecoin sector is driven by its convenience and accessibility. Dollar-pegged stablecoins offer cheaper fees, near-instant finality times, and no bank account required, making them an attractive method of providing banking services to the unbanked.
According to the World Bank, an estimated 1.4 billion people lack access to adequate banking services. This lack of banking services is primarily due to insufficient infrastructure in developing countries. However, with smartphones and internet access becoming increasingly widespread, crypto wallets have provided a solution to this problem.
The real-world asset tokenization sector, which includes government securities, stocks, corporate bonds, stablecoins, collectibles or any other asset tokenized on a blockchain ledger, is projected to reach up to $30 trillion by 2030. This growth is driven by the increasing demand for secure, transparent, and efficient financial services.
VC Investment in Crypto Projects Set to Increase
Market analyst Infinity Hedge predicted that crypto VC investment in 2025 would surpass last year’s levels but wouldn’t approach the peak recorded during the 2021 bull market. According to market data platform PitchBook, VC investments in crypto projects are projected to grow to $18 billion in 2025.
A recent report from Galaxy Digital also forecasted VC investments in crypto projects to grow 50% year-over-year in 2025 but will fail to reach highs established in 2021-2022. Despite the expected growth, it is essential for investors to be aware that VC investment in crypto projects may not match the peak levels seen during the 2021 bull market.
Conclusion
The outlook for crypto VC investment in 2025 is promising, driven by the growing interest in stablecoin products, real-world asset tokenization, artificial intelligence, and infrastructure. While macro risks exist, a supportive macro environment and increasing demand for secure financial services are expected to drive more VC investments into crypto projects.
As investors, it is essential to be aware of the potential risks and opportunities that lie ahead. With the projected growth in VC investment and the increasing adoption of stablecoins and real-world asset tokenization, 2025 is shaping up to be an exciting year for the crypto market.
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