Throughout his years-long crypto career, Valentin Mihov has been wearing many hats: he’s been a software engineer, a CTO, a yield farmer, a security auditor, and an angel investor. Now, he’s joining ETHSofia to share his Crypto Investment Thesis for 2025.

The current crypto cycle is unlike any other before. Why do you think that is? Where do you think we are in the bear / bull trajectory at the moment?

The last bull market was one of the shortest in history, while the previous cycle was one of the longest. It seems we're witnessing a reversion to the mean! The last cycle was primarily driven by two factors: the approval of crypto ETFs and the rollout of ETH re-staking technology. However, momentum slowed as no new capital flowed into the ETFs, and the re-staking space currently lacks significant applications.

I believe today’s market is largely influenced by macroeconomic factors, such as central bank policies and global growth. The greatest fears of a recession may be behind us, which suggests the bear market bottom could be in. Of course, unexpected events—like a Japanese carry trade unwind—could still create volatility. Going forward, much will depend on macro developments and whether we see a shift to risk-on sentiment in global markets. If growth resumes and interest rates decrease, crypto will likely rise. But if growth is sluggish and inflation remains sticky, we could be in for a period of choppy price action.

Some analysts claim the Alt Season is upon us, do you agree? How do current market conditions affect venture capital interest and operations in the blockchain sector?

I don’t believe we're in a true Alt Season. In my view, an Alt Season occurs when all altcoins surge regardless of fundamentals. What we’re seeing now is select altcoins, like Aave, gaining traction based on strong fundamentals.

As for venture capital, I’m seeing a lot of caution. Valuations are down by 30-50% compared to six months ago, and many teams are struggling to close their funding rounds. To reinvigorate the space, we need a new narrative. Hopefully, we’ll see exciting developments in areas like GameFi, Real World Assets (RWAs), or successful consumer apps that gain widespread traction.

From a VC perspective, what are the most compelling narratives in the crypto space right now? Which one is particularly interesting to you - AI, GameFi, RWAs or something else?

Different VCs have different preferences. In bearish markets, infrastructure tends to be favored because it’s seen as having a higher chance of success. We’re currently seeing a lot of infrastructure projects in development, but consumer demand remains low. High-performance Layer-1 and Layer-2 projects are raising capital, yet block space remains cheap due to low demand. What we need is a successful consumer app that can onboard millions of users. I see potential in GameFi and RWAs to achieve this.

What advice would you give to new founders looking to secure funding in today's competitive market?

Start by building a proof of concept (PoC) and be as lean as possible with your spending. If you’re raising funds, aim to secure enough capital to sustain your company for at least 1.5 years before needing another round. Make sure you assemble a stellar team, as in early-stage deals, the team is often the most important factor. Don’t rush into launching a token—the ICO era is over and it’s not coming back. Avoid investors who push for short vesting periods. If your product is successful, launching a token will be easy later on. But launching a token without traction after 1-2 years is extremely difficult.

How important is prior experience in crypto or blockchain when you evaluate a team’s potential?

Hands-on experience in crypto is crucial for distinguishing good projects from bad ones. I see many teams trying to capitalize on hype in certain sectors—Bitcoin Layer 2s being a prime example. Many of these projects simply replicate what’s already available on Ethereum, but with a Bitcoin DeFi label. These teams often target investors who know Bitcoin but are less familiar with the DeFi ecosystem on Ethereum-based chains. In my opinion, it’s hard to find true value in these projects.

How do you see the regulatory landscape evolving, and how might it impact fundraising for crypto projects? Do you think that events with major international repercussions like the US elections play a role?

The regulatory landscape is definitely shifting. The US remains a difficult place for crypto innovation, while the EU, though not without its challenges, offers a somewhat friendlier environment. Many projects are incorporating offshore to avoid regulatory hurdles, but this isn’t an option for all, particularly for RWAs, which require proper structuring.

Major events like the US elections can have a significant impact on the crypto market. For instance, Trump’s earlier lead in the polls boosted market sentiment due to his more relaxed stance on crypto regulation. However, with Kamala Harris joining the race and the Democrats regaining traction, the outcome is now uncertain. If Democrats retain the White House, we could face another tough four years under Gary Gensler’s “regulation by enforcement” approach.

What inspired you to join ETHSofia? What aspects of the conference are you most looking forward to?

I’m eager to see more enthusiasm from the Bulgarian development community around crypto. Serbia, for example, is ahead in terms of innovative projects, and I hope Bulgaria can catch up. There’s cutting-edge technology being developed in the ecosystem, and I’d love to see more Bulgarian startups get involved.