Crypto Crystal Ball 2025: Will VCs Go Crypto Crazy Again?

Among other things, 2024 was undeniably bright for the crypto industry. market power and the political reputation. Now, other sectors are taking notice once again, noting that the 2021 crypto bull market could be renewed or something else.

At the end of each year, Deciphering takes a look at his Crypto Crystal Ball to reveal the narratives that will shape the coming year and how they may affect you.

After looking at Donald Trump’s crypto agenda and the possibility that the upcoming Ethereum upgrade will finally lead to mass adoption, here’s a look at how crypto’s relationship with venture capital is poised to change in 2025, and what that means.

In 2021, crypto was the backbone of the VC crowd. But after the collapse of the digital asset market, our novel industry suddenly took off persona non grata on Wall Street and the Bay Area. There was some talk about crypto or NFTs wiped From project sites like Black Plague.

Now that crypto prices are finally rebounding, venture capitalists are scrambling to reunite with blockchain developers and pretend the breakup never happened.

Both VC giant Andreessen Horowitz and famed Silicon Valley startup incubator Y Combinator announced In December, they are once again seeking to support crypto-related projects in 2025.

Of particular interest are projects related to sustainability. This was announced by Luke Gebb, head of Digital Labs at American Express Deciphering 2025 will be a defining year for the stablecoin industry that will “change the payment landscape.” Indeed, Y Combinator is specifically looking for stablecoin-related startups.

Why the sudden turn? Turner Novak, a technology-focused venture capitalist, believes the answer to this question is very simple.

“VCs are chasing momentum,” Novak said Deciphering. “If prices go up, they always come back.”

But after years of crypto defunct, is VCs urgently needed?

Alexander Lin, a blockchain-focused investor ReforgeIt is determined that industrial impulses must be resisted. As Lin sees it, the lesson of the last bull cycle was that venture firms threw billions of dollars into worthless crypto projects, and the industry suffered huge losses as a result.

“They invested in dodgy projects, founders who misaligned incentives, and projects that prioritized launching labels quickly,” Lin said. Deciphering.

Why makes sense, Lin said. Investing in such projects has allowed venture capital firms to avoid waiting years for an acquisition or IPO to turn a profit. If these firms jump into a crypto project early, hype it up, and then pull out shortly after the token launch, then the token and the project don’t matter.collapsed after a month. The gambit was successful on the VC balance.

If traditional VCs learned anything from the last crypto bull cycle, Lin said, it’s not to invest in sustainable blockchain companies that will grow over time; instead, it will be for early entry into speculative projects.

Lin believes that if this cycle repeats, it could harm crypto’s long-term future. To avoid this outcome, he says it’s important for crypto projects to weed out investors looking to dip their toes into the flow of cryptos. 3 trillion dollars market cap; instead, he said projects should partner with backers who aim to grow crypto to $20 trillion.

“You’re not going to get there by investing in meme coins, that’s for sure,” Lin said. “You get there by investing in fundamental infrastructure companies.”