2024 was a standout year for cryptocurrencies. Thanks to a spate of favorable regulatory and political developments, in particular during the latter portion of the year, bullishness for this asset class took off like a rocket.

Bitcoin, major altcoins, as well as many meme coins experienced a high level of price appreciation throughout the year, according to this list of cryptocurrency rates on Binance. This sentiment carried over into the new year, and while there has been some volatility as of late, subsequent developments related to the regulatory and political changes driving last year’s sentiment shift have the potential to drive a similar one this year.

With this, not only do institutional and retail investors continue to explore ways to increase their exposure to cryptocurrencies. Investment in blockchain-based startups is expected to stay strong as well this year. At least, based upon the extent in which venture capital’s appetite for Web3 investments has increased in recent months.

Regulatory Clarity: Making Blockchain Technology More Suitable for Institutional Investment

According to Crunchbase’s Web3 tracker, blockchain-based startups raised a total of $7.4 billion from venture capital firms during the calendar year ending Dec. 31, 2024. $1.6 billion of this figure was raised during Q4 2024 alone, this total capital raise represented a big improvement from the $1.2 billion raised during the prior year’s quarter.

There are numerous reasons why venture capital investment in Web3 startups has picked up, since falling considerably during the “crypto winter” that followed the early-2020s boom in crypto and blockchain technology. For instance, the recent generative AI boom has spurred increased interest in opportunities related to the intersectionality of these two technologies.

However, perhaps a larger factor at play behind venture capital’s growing demand for Web3 investments is the aforementioned positive developments in the area of cryptocurrency regulation. 

Between the European Union’s approval of harmonized cryptocurrency regulation, known as Markets in Crypto-Assets (MiCA) regulation, coupled with the Trump administration fast-tracking a pro-growth regulatory policy for crypto and blockchain technology in the U.S., there is now a greater sense of “regulatory clarity.” In turn, this has made the space more suitable for investment from institutional investors like venture capital firms.

VC in Web3: Still Rising, based on Q1 2025 Data

Enthusiasm for cryptocurrencies may be taking a breather right now, but there’s already clear evidence that venture capitalists are not slowing down, in their allocation of startup and growth capital to companies in the Web3 space. 

Last year’s $7.4 billion in venture capital investment for Web3 firms represented just a small increase from the $7.1 billion raised from VC for Web3 firms during 2023. However, it may be a different story in 2025, based upon the latest Web3 tracker data. 

So far in Q1 2025, venture capital has committed $3.7 billion in capital to companies in this industry. That’s more than double the amount of capital raised last quarter. Although possible that this amount is skewed due to one or several recently-announced major deals, it could be indicative of a further wave of Web3 venture capital investment.

That’s not all. Much like how further developments related to favorable changes in regulatory policy, especially U.S. regulatory policy, could spark another wave of bullishness for cryptocurrencies, such developments may have a similar impact in this area of the blockchain economy.

A Possible End Result: Web3’s Breakout into the Mainstream

There are tremendous implications with the unfolding resurgence in venture capital Web3 investment. With the increased inflow of institutional capital into this space, technological breakthroughs that further increase the number of Web3 use cases could be achieved.

This in turn could drive a massive increase in user adoption of Web3 technology, perhaps to the extent that Web3 finally experiences its breakout into the mainstream, replacing the current highly-centralized online space with one featuring greater decentralization and distributed ownership/control.

Although additional factors, such as possible future regulatory changes, will determine whether such a future arrives, this does underscore the role that investment from institutional such as venture capital firms will play in the further growth and development of the Web3 economy.