Among other things, 2024 saw an undeniable glow-up for the crypto industry, both in terms of market strength and political reputation. Now other sectors are once again taking note, setting up what could either be a rehash of 2021’s crypto bull market, or something else entirely.
At the end of every year, Decrypt looks into its Crypto Crystal Ball to augur the narratives likely to shape the coming year, and how they’re likely to impact you.
After examining Donald Trump’s crypto agenda and the odds that an upcoming Ethereum update could finally bring about mass adoption, here’s a look at how crypto’s relationship with venture capital is poised to change in 2025—and what shift could mean.
Back in 2021, crypto was the belle of the VC ball. But as soon as the digital assets market crashed, our novel industry suddenly became persona non grata on Wall Street and in the Bay Area. Any mention of crypto or NFTs was scrubbed from project pitch decks like the Black Plague.
Now that crypto prices are finally soaring again, it looks like venture capitalists are already trying to get back together with blockchain devs—and pretend the break-up never happened.
Both VC giant Andreessen Horowitz and famed Silicon Valley startup incubator Y Combinator announced in December that they are once again eagerly seeking to back crypto-related projects in 2025.
Of particular interest are projects related to stablecoins. Luke Gebb, the head of American Express’ Digital Labs division, told Decrypt that 2025 “will mark a pivotal year for the stablecoin industry” that could “transform the payments landscape.” Indeed, Y Combinator is specifically seeking stablecoin-related startups.
Why the sudden turnaround? Turner Novak, a tech-focused venture capitalist, thinks the answer is brutally simple.
“VCs chase momentum,” Novak told Decrypt. “They will always be back if prices are going up.”
But should crypto be so quick to take VCs back, years after being dumped?
Alexander Lin, a blockchain-focused investor at Reforge, is adamant that the industry should resist the impulse. As Lin sees it, the lesson of the last bull cycle was that venture firms dumped billions of dollars into worthless crypto projects to turn a quick buck, and the industry suffered immensely as a result.
“They invested in dogshit projects, founders that had misaligned incentives, and projects that had the sole priority of launching a token quickly,” Lin told Decrypt.
It makes sense why, Lin said. Investing in such projects allowed venture firms to dodge waiting years for an acquisition or IPO to make a profit. If these firms got in early to a crypto project, hyped it up, and then got out shortly after a token launch, it didn’t matter if the token—and the project—crashed months later. The gambit was successful on the VC’s balance sheet.
If traditional VCs have learned one thing from the last crypto bull cycle, Lin said, it won’t be to invest in durable blockchain companies that will grow over time; it will be instead, to get in even earlier to speculation-fueled projects.
Lin thinks that cycle, if repeated, could be detrimental to crypto’s long-term prospects. To prevent such an outcome, he says it’s essential for crypto projects to reject investors looking to wet their beaks on crypto’s current $3 trillion market cap; he said, instead, projects should only partner with backers focused on growing crypto to a $20 trillion market cap.
“You don’t get there by investing in meme coins, that’s for sure,” Lin said. “You get there by investing in foundational infrastructure companies.”
