A Tale of Two Trends: Fewer Deals, But More Funding
Despite a dip in the number of deals, the first quarter of 2025 saw a significant surge in crypto venture capital (VC) funding, according to PitchBook‘s latest report. While the number of deals made in Q1 2025 dropped by 39.5% compared to the same period in 2024, the total value of those deals more than doubled, reaching $6 billion. This divergence highlights the evolving landscape of crypto investments, where investors are increasingly focusing on specific areas deemed promising.
Stablecoins: Crypto’s Killer App
One key driver behind this shift is the growing prominence of stablecoins. Robert Le, PitchBook‘s senior crypto research analyst, noted that the market value of stablecoins grew by 12% in Q1, reaching $227.1 billion, even as other cryptocurrencies struggled. Le believes this trend underscores the increasing consensus that dollar-denominated settlement, facilitated by stablecoins, is a critical and resilient aspect of the crypto ecosystem.
“Dollar-denominated settlement remains crypto’s killer application, insulated—at least partially— from broader risk-off moves.” – Robert Le, PitchBook
This focus on stablecoins is expected to fuel further VC investments, particularly in startups that leverage stablecoins for payments, remittances, and treasury management. These businesses are seen as directly benefiting from the growing velocity of stablecoin transactions.
Infrastructure and Development: Building the Future
Beyond stablecoins, another area attracting significant VC interest is crypto infrastructure and development. In Q1 2025, these firms received nearly $955 million across 30 deals, demonstrating the importance of building a robust foundation for the crypto ecosystem.
Circle’s IPO: A Potential Benchmark for Valuation
Looking ahead, PitchBook sees Circle’s pending initial public offering (IPO) as a critical event for the crypto equity market. If Circle is valued above the rumored $4 billion to $5 billion range, it could provide a significant benchmark for future exits, signaling to investors that similar business models are profitable and sustainable.
“A strong roadshow could therefore crowd in new late-stage capital and reset valuation expectations upward across the payments and infrastructure stack.” – Robert Le, PitchBook
The Bybit Exploit and the Need for Security Solutions
The $1.4 billion Bybit exploit, the largest in crypto history, has also had an impact on VC investment trends. Le suggests that this incident may accelerate institutional demand for solutions that enhance security and transparency. This includes tools for real-time proof-of-reserve, improved custody solutions, and middleware that simplifies key management.
“Startups addressing those vectors should find a more receptive funding environment despite the broader valuation reset.” – Robert Le, PitchBook
In conclusion, while the number of crypto VC deals may have declined in Q1 2025, the increased focus on stablecoins, infrastructure, and security solutions suggests that the overall funding environment remains robust. This shift in investment priorities reflects the ongoing evolution of the crypto landscape, with investors seeking out opportunities that offer both immediate utility and long-term growth potential.
