Crypto Consolidation Looms: VCs Eye Stablecoins and AI

The cryptocurrency sector is expected to witness a wave of consolidation this year, with venture capitalists (VCs) particularly focusing on the stablecoin and artificial intelligence (AI) sectors, according to a report by investment research firm PitchBook.

In the fourth quarter of 2024, the financing amount in the cryptocurrency sector increased by 13.6% compared to the previous quarter, reaching $2.5 billion across 351 transactions. Investors made larger investments in a few early-stage companies with soaring valuations, with the average pre-money valuation for seed-stage companies increasing by 70.2% year-on-year.

The report mentioned that although the total financing amount in the cryptocurrency sector in 2024 remained stable at $10 billion, the number of transactions decreased. Investors primarily funded early-stage startups, with the median valuation doubling year-on-year to reach $52 million, while later-stage companies only received 5% of all funding rounds.

PitchBook described 2024 as a year of "increasing investor selectivity" and expected consolidation this year between infrastructure providers, exchanges, and custody companies, with VCs showing particular interest in the stablecoin and AI sectors. This trend is likely to continue in 2025, as investors seek to capitalize on the growing demand for stable and secure cryptocurrencies and the potential of AI in the sector.