Correlation between Bitcoin price and VC investment breaks down: Report

Bitcoin’s bull market in 2024 failed to generate a commensurate uptick in venture capital funding, suggesting that institutional investors no longer have a blank-check approach to crypto and blockchain startups. 

According to a Jan. 16 report by Insights For VC, Bitcoin’s (BTC) more than 100% gain last year should have translated into a sharp rise in blockchain VC. 

Since January 2023, “this correlation has weakened significantly,” the report said. “Bitcoin has reached new all-time highs, while VC investment activity has struggled to keep pace.”

“Current market narratives favor Bitcoin, potentially overshadowing other crypto investment opportunities,” the report continued. 

Insights For VC counted 2,153 blockchain funding rounds in 2024 worth $11.5 billion, which remains well below levels seen in 2021 and 2022. This figure was lower than the one captured by the DeFi Report, which showed $13.6 billion in total funding for the year.

Decentralized finance (DeFi) and blockchain infrastructure were two notable bright spots last year, with funding growing 85% and 57%, respectively, according to Insights For VC.

“Bitcoin-based DeFi use cases, including stablecoins, lending protocols, and perpetual swaps, were key drivers of this growth,” the report said.

Related: Crypto VCs reveal what they’re looking for in 2025

Rebound ahead? 

Analysts expect crypto venture deals to rebound in 2025, driven by rising crypto prices and shifting narratives. 

According to PitchBook, crypto ventures will attract $18 billion in fresh capital this year, which is between 32% and 56% higher than in 2024, depending on the comparison used. 

Meanwhile, Galaxy Digital reported that crypto VC deals would grow 50% year-over-year in 2025. 

However, both forecasts suggest funding will fall well short of the 2022 highs, where more than $30 billion was allocated, according to Galaxy Digital.

Bloomberg reported that renewed interest in crypto is part of a much broader trend that marks the end of the “fintech winter,” where funding deals were down across the board due to higher interest rates and stringent regulations. 

QED Investors partner Amias Gerety told the publication that the role of stablecoins in cross-border payments could be blockchain’s most interesting use case and one that is likely to attract investors’ attention. 

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