Despite the uncertainty created by US President Donald Trump’s trade and economic policies in global financial markets, investment appetite for cryptocurrency and blockchain-focused companies remains strong in the first weeks of the year. While 14 different crypto startups received a total investment of $362 million in just one week in the third week of January, the total capital entering the sector since the beginning of the year has exceeded the $1 billion threshold. DeFiLlama data shows that despite volatile market conditions, venture capital has not completely withdrawn from the crypto space.
Early Stage Investors Ignore the Market
Although Trump’s trade threats and “out of America” rhetoric have led to sharp movements in stock markets, funds investing in early-stage startups do not focus on short-term fluctuations. The selling pressure seen in public markets is not being felt to the same extent on the fundraising side, according to Annabelle Huang, a principal at Altius and former Amber Group venture capital partner. The main reason for this is that venture capital focuses on long-term growth potential and makes decisions independent of daily price movements.
Huang also emphasizes that some investors see current geopolitical tensions as an opportunity. Inspired by the rise of companies like Palantir or Anduril, which stand out in fields such as defense and data analytics, funds are turning to strategic uses of blockchain. However, the increase in global risks also reminds us to be cautious. On the other hand, the fact that the funding volume has decreased by more than 50 percent compared to the same period last year shows that the high expectations created by the crypto rally in 2024 have now decreased to more realistic levels.
Where Are Investments Concentrated, Why Are Banks Interested?
The biggest transaction of the week was the $213 million IPO of crypto custody company BitGo. According to Nasdaq data, this transaction stood out as the largest capital movement of the week. Superstate, which operates in the field of tokenization, received an 83 million dollar Series B investment led by Bain Capital Crypto and Distributed Global. The company is developing tokenized investment products based on Ethereum that track short-term US bonds and has filed an application with the US Securities and Exchange Commission (SEC) for these products. Additionally, Solana-based prediction marketplace Space’s $14 million public token sale showed investors’ continued interest in alternative finance and betting platforms.
In parallel with this situation, traditional finance giants also started to look more favorably towards digital assets. News that Switzerland-based UBS plans to offer Bitcoin and Ether trading to its private banking customers attracted attention. According to Bloomberg, the bank aims to test the service with a limited group of customers in Switzerland first and then expand it to Asia-Pacific and the United States. Similarly, recent news that another global bank has started pilot projects for tokenized fund products reveals that the boundaries between crypto and traditional finance are increasingly blurring.
As a result, although the volume of capital entering the crypto sector remains below past peaks, the nature of investments is becoming more selective and strategic. While the long-term perspective of venture capital limits the impact of short-term political and economic shocks, the cautious step of large banks into the sector may accelerate the integration of crypto with mainstream finance. The direction of regulations in the coming period will be the most critical factor determining the speed of this process.
