Bitcoin's 2024 Bull Market Fails To Boost Venture Capital Funding

According to Cointelegraph, the anticipated surge in venture capital funding for blockchain and crypto startups did not materialize in 2024, despite Bitcoin's impressive market performance. Insights For VC reported on January 16 that Bitcoin's over 100% gain last year was expected to lead to a significant increase in blockchain venture capital. However, since January 2023, this correlation has weakened considerably. While Bitcoin reached new all-time highs, venture capital investment activity struggled to keep up. The report highlighted that current market narratives are favoring Bitcoin, potentially overshadowing other crypto investment opportunities. Insights For VC documented 2,153 blockchain funding rounds in 2024, totaling $11.5 billion, which is significantly lower than the levels observed in 2021 and 2022. This figure also falls short of the $13.6 billion reported by the DeFi Report for the same year. Despite the overall decline, decentralized finance (DeFi) and blockchain infrastructure experienced notable growth, with funding increasing by 85% and 57%, respectively. Bitcoin-based DeFi use cases, such as stablecoins, lending protocols, and perpetual swaps, were key contributors to this growth. Looking ahead, analysts predict a rebound in crypto venture deals in 2025, driven by rising crypto prices and evolving market narratives. PitchBook forecasts that crypto ventures will attract $18 billion in new capital this year, representing an increase of 32% to 56% compared to 2024, depending on the comparison used. Galaxy Digital also anticipates a 50% year-over-year growth in crypto VC deals in 2025. However, both forecasts indicate that funding will remain below the 2022 peak, where over $30 billion was allocated. Bloomberg noted that the renewed interest in crypto is part of a broader trend signaling the end of the "fintech winter," characterized by reduced funding deals due to higher interest rates and stringent regulations. Amias Gerety, a partner at QED Investors, mentioned that the role of stablecoins in cross-border payments could be one of blockchain's most intriguing use cases, likely to capture investors' attention.