Introduction
After experiencing industry restructuring, trust crises, and policy cleansing from 2022 to 2024, the crypto market in 2025 ushered in a new round of transformation led by institutions. As the regulatory framework becomes increasingly clear and compliant channels are fully opened, crypto assets are gradually shedding the 'fringe asset' label to become 'core allocations' in the portfolios of more and more institutions.
The rise of the current wave of 'institutionalization' is driven by a series of landmark policies and market events:
• (Genius Act) through which the SEC officially approved the listing of spot Bitcoin ETFs in 2024 (including giants like BlackRock, Fidelity, ARK), marking the full opening of mainstream channels for compliant entry;
• Hong Kong (Stablecoin Regulation) has established a stablecoin issuance licensing system, creating an Asia-leading regulatory framework for crypto assets;
• The European MiCA regulation has been fully implemented, standardizing stablecoin and crypto asset regulation within the EU, laying a legal foundation for cross-border institutional investment;
• The Russian Ministry of Finance has expressed support for bringing crypto assets 'out of the shadows' and opening compliant trading channels for high-net-worth investors;
• Traditional financial institutions are actively entering the space, with BlackRock, Franklin Templeton, Nomura, Standard Chartered, and others sequentially laying out digital asset management, custody, payment, and underlying infrastructure.
Clarification of regulations has driven the restoration of market confidence and the restructuring of capital structures. According to the EY-Parthenon Institutional Digital Assets Survey released in 2025, over 86% of institutional investors globally reported participating in or planning to invest in crypto assets in the next three years. Research by Nomura also shows that more than half of Japanese institutions have included digital assets in their strategic vision.
In this context, this report will systematically sort out the motivations of institutional investors' allocation to crypto assets, focusing on the evolution of their investment strategies, the differentiation of allocation paths, and the transformation of market participation methods, revealing the structural opportunities in the crypto asset market in the 'institutional era' through case analysis.
Motivations for Institutional Entry
Digital assets have gradually transformed from being regarded as 'high volatility' and 'high risk' fringe assets to becoming an important allocation that cannot be ignored in institutional portfolios. According to multiple surveys, over 83% of institutional investors plan to continue or increase their allocation to digital assets by 2025, with a significant proportion indicating that they will 'significantly increase' their allocations.
2.1 High Return Rates and Risk Diversification
Since 2012, the return rates of cryptocurrencies like BTC have significantly outpaced those of traditional assets such as gold, silver, and Nasdaq, with BTC's average annual return reaching 61.8%. Meanwhile, traditional institutional investment portfolios are facing diminishing marginal returns. Especially in the post-pandemic era, high inflation and uncertainty in policy interest rates have made institutions more inclined to seek low-correlation assets.
Research shows that the correlation coefficient between BTC and stocks has averaged below 0.25 over the past five years, with a correlation with gold as low as 0.2 to 0.3, and a more independent relationship with currencies and commodities from emerging markets (such as Latin America and Southeast Asia). This makes crypto assets important tools for pursuing excess returns, hedging systemic risks, and optimizing the Sharpe ratio.
2.2 Strategic Demand for Inflation Hedging and Fiat Currency Depreciation Risks
Since 2020, global quantitative easing has led to widespread increases in major asset prices across the globe, making inflation the number one challenge for global investors. Crypto assets (especially BTC), with their technical property of a 'fixed total supply of 21 million,' are seen as 'digital gold,' especially suitable as a tool for hedging fiat currency depreciation risks. BlackRock's chief investment officer Rick Rieder has publicly stated: 'In the long run, BTC is more like a store of value rather than a pure medium of exchange.'
2.3 Infrastructure and Settlement Efficiency Improvement
For a long time, one core concern of institutional investors regarding crypto assets has been their opaque settlement processes, lack of custody standards, and excessive counterparty risk. The early forms of the crypto asset market resembled 'shadow finance,' lacking centralized clearing systems, regulated custody institutions, and standardized risk control mechanisms similar to traditional finance. This creates high uncertainty for secure custody of funds and post-trade asset clearing, especially for large institutions, where this 'uncertainty' itself poses high risks.
However, over the past few years, the infrastructure construction of the entire crypto asset market has undergone a qualitative leap, especially in the following key areas:
• Custody services entering the compliance track
Currently, several custody service providers have obtained trust licenses granted by financial regulatory authorities, providing compliant asset custody services for institutional clients. For example, Fidelity Digital Assets offers end-to-end custody and trading solutions for institutional clients and has expanded some services to the Asian and European markets. These institutions can not only achieve traditional security mechanisms such as cold wallet isolation and multi-signature management, but also enhance the trust level of fund storage with insurance schemes, anti-attack systems, and real-time audits.
• Clearing systems and matching mechanisms are becoming more specialized.
At the trading level, the previous CEX and OTC off-exchange trading processes often experienced delays and counterparty default risks due to the lack of clearing intermediaries. Trading platforms and financial institutions like Gate have begun to introduce settlement and matching mechanisms closer to traditional finance.
• Improved settlement efficiency leads to cost reductions and upgraded risk control
In traditional markets, cross-border payments and securities clearing often take days and incur high costs. In contrast, the on-chain settlement mechanism in the crypto market naturally offers high efficiency and low intermediary dependency. Combined with the aforementioned custody and clearing infrastructure, it can achieve T+0 transaction clearing efficiency and a 24/7 operating mechanism, breaking the time constraints of traditional financial markets and supporting global asset synchronized circulation.
2.4 Technology-Driven Future Business Participation
Institutional entry into the crypto market is also a strategic choice of 'betting on future technology directions.' Emerging fields such as Web3, DeFi, and RWA may reshape the service methods and asset forms of finance.
For example:
• Swiss banks are participating in on-chain bond issuance of RWA.
• Citibank launched a tokenized deposit experimental platform
• JPMorgan has deployed the Onyx project to achieve on-chain corporate settlements.
In these transformation processes, early participants have a first-mover advantage.
2.5 Client Demand and New Generation Asset Preferences
Many institutional investors, especially pension funds and insurance companies, are undergoing an audience structure 'generational shift.' Generation Z and Millennials are more familiar with digital assets, pressuring institutions to reassess their allocation models. Fidelity's 2024 report indicates that nearly 60% of Millennial clients hope to include BTC or ETH in their retirement accounts. This change accelerates the diversification and popularization of institutional products.
Institutional Investment Strategy Analysis
As the crypto market gradually institutionalizes and matures in asset structure, the participation methods of institutional investors are becoming increasingly diversified. From 'tentative positions' to 'portfolio strategy construction,' institutional investment is showing significant characteristics of layering, strategization, and structuring. This chapter systematically sorts out the typical entry strategies and asset preferences of different institutions in crypto asset investment from the three dimensions of institutional type, operational style, and allocation path.
3.1 Classified by Institutional Type: Heterogeneous-Driven Strategy Structure
Institutional investors are not a homogeneous group but a composite ecosystem composed of different risk preferences, allocation goals, and liquidity needs. Typical representatives include family offices, pension/sovereign wealth funds, and university endowment funds, all showing a high degree of differentiation in their investment paths in the crypto market.
3.1.1 Family Offices
• Has a high tolerance for risk and acceptance of asset innovation, with flexible allocation targets;
• Preferring early-stage token projects, crypto-native risk funds, and on-chain yield strategies;
• Often adopt direct holding of coins, participate in token private placements, or invest indirectly through Web3 funds.
Case: Several family offices in Singapore and Switzerland are actively participating in Ethereum staking services and seed round financing for Web3 infrastructure projects (such as Rollup, Oracles).
3.1.2 Pension Funds / Sovereign Wealth Funds
• Pursuing long-term stable returns and macro-hedging capabilities, with a conservative allocation style;
• More inclined toward compliant products, such as spot ETFs and bond-type RWA (Real-World Assets);
• Typically, exposure to crypto assets is indirectly obtained through large asset management platforms (e.g., BlackRock, Fidelity).
Case: The Norwegian sovereign fund Norges Bank disclosed in its 2024 annual report that it holds equity in Coinbase and BTC ETF products, marking that sovereign funds are laying out digital assets through equity paths.
3.1.3 University Endowment Funds and Institutional Funds
• Allocation logic is dominated by technological innovation and cutting-edge trends;
• Participating through well-known Web3 funds (such as a16z crypto, Paradigm, Variant);
• More inclined towards early-stage track investments, including Layer2, privacy computing, AI+Crypto, etc.
Case: Endowment funds from Harvard, MIT, Yale, and others have long-term layouts in Web3 funds, with high participation in data composability and foundational protocol layers.
3.2 Classified by Operational Style: Coexistence of Active and Passive Strategies
Institutional operations in crypto assets can generally be divided into two categories: active management and passive allocation, reflecting differentiated preferences for risk-return structures and operational resource investment.
3.2.1 Active Allocation Strategy
• Build their own research teams, deeply participate in on-chain data analysis and off-chain valuation modeling;
• Strategies cover arbitrage, staking, DeFi liquidity mining, gamma (volatility) strategies, protocol governance, etc.;
• Emphasizes strategic flexibility and capturing cutting-edge tracks; the investment structure typically involves multi-chain, multi-asset, and cross-protocol combinations.
Case: Franklin Templeton built a crypto fund management platform, offering services such as Staking-as-a-Service and DeFi liquidity deployment, a typical representation of the institutionalization of active strategies.
3.2.2 Passive Allocation Strategy
• Often indirectly held through ETFs, structured notes, fund shares, etc.;
• More emphasis on controllability of net value fluctuations and transparency of risk exposure;
• Targets are concentrated on high market cap assets like BTC and ETH, with occasional allocations to stablecoin yield strategies.
Case: The 'Multi-Asset Digital Index Fund' set to launch in 2025 has gained favor among pension funds and insurance institutions to build a low-correlation asset pool.
3.3 Classified by Allocation Path and Asset Preference: From 'Buying Coins' to 'Building Systems'
In actual investment operations, institutions no longer view crypto assets as a single target but construct sub-systems of assets through strategy combinations. The main allocation paths can be summarized as three types:
3.3.1 Mainstream Asset Allocation (BTC / ETH)
• As core assets of 'digital gold' and 'Web3 operating systems,' mainstream currencies constitute the majority of institutional asset pools;
• BTC typically serves as a store of value and inflation hedge;
• ETH represents a structural bet on ecosystems such as on-chain economy, DeFi, and RWA.
3.3.2 Track-Themed Allocation
• Focus on high-growth, high beta emerging directions, such as Layer2 (Arbitrum), modular blockchain (Celestia), AI-driven protocols (Bittensor), and decentralized storage (Arweave);
• Investment methods mainly involve early-stage private placements and fund share subscriptions, suitable for high-risk-tolerant institutions;
• Often used to seek structural dividends and medium to long-term return potential.
3.3.3 Infrastructure and Compliance Service Allocation
• The investment targets include equity in compliant custody institutions (such as Anchorage), on-chain risk control platforms, and DePIN (Decentralized Physical Infrastructure Network);
• Seen as non-coin targets with policy moats and long-term technological value;
• Applicable to sovereign wealth funds, university funds, and other institutional investors with strategic expectations for 'crypto ecological infrastructure.'
3.4 Summary: The Structured Evolution of Strategy Spectrum
Through a three-dimensional cross-analysis of institutional type, operational style, and allocation path, it can be seen that institutional investment in crypto assets has far exceeded the 'buying coins' level and is building a structured asset allocation system of 'multi-strategy, multi-path, cross-track.' This evolution of strategy spectrum reflects institutional recognition of asset nature and macro logic, and also demonstrates deep involvement in technological paths, governance structures, and policy trends.
In the future, as compliant products continue to diversify and infrastructure matures further, the strategy spectrum of different types of institutions will become more diversified and finely layered, constructing a stable anchor position for crypto assets in the global asset allocation system.
Representative Cases
In the past year, institutional interest in crypto assets has continued to rise, with many publicly listed companies and investment institutions increasing their allocations to mainstream crypto assets like Bitcoin (BTC) and Ethereum (ETH) through direct purchases, increases, or long-term holdings. This trend not only reflects the recognition of traditional financial capital for the crypto market but also highlights the potential of assets like Bitcoin in inflation hedging and asset diversification.
4.1 Strategy
MicroStrategy, originally a traditional tech company focused on business intelligence (BI) software, was founded in 1989 and has long specialized in enterprise data analysis and reporting services. Although the products cover multiple large enterprise clients, its main business growth has been slow over the past decade, facing a growth bottleneck in revenue scale and profitability. Amid changes in the macro environment, increasing inflation pressures, and declining returns on fiat assets, the company's management began to rethink the structure of the balance sheet and the efficiency of corporate fund allocation. In 2020, under the leadership of then-CEO Michael Saylor, MicroStrategy initiated a controversial yet highly forward-looking strategic transformation: adopting Bitcoin as the company's primary reserve asset.
In August 2020, MicroStrategy first purchased 21,454 BTC for $250 million, and then increased its total holdings to over 620,000 BTC through multiple rounds of purchases between 2020 and 2024, with a total purchase cost exceeding $21 billion. Notably, this series of acquisitions was not solely reliant on the company's own funds but implemented a 'financing leverage' strategy through a series of capital market tools (including issuing convertible bonds, private placements, ATM stock financing, etc.) to amplify BTC's asset exposure and return potential. This mechanism not only effectively leveraged market funds but also gradually transformed MicroStrategy into a 'Bitcoin Proxy,' whose stock price is highly positively correlated with BTC, viewed by investors as an early alternative to an ETF.
This 'corporate holding + market financing + BTC asset revaluation' combination strategy has profoundly impacted MicroStrategy's operational landscape. The Q2 2025 financial report shows that, although the software main business remains stable, the book appreciation of BTC holdings has become the primary source of profit for the company; the quarterly net profit reached $10 billion, and the stock price increased by more than 39% within the year. This result not only reshaped its capital market image but also significantly enhanced the company's liquidity and balance sheet strength.
In early July 2025, Strategy announced the purchase of 21,021 BTC for $2.46 billion, bringing its total Bitcoin holdings close to an all-time high. However, in the following two weeks, Strategy did not announce any new purchases, leading the market to speculate that its accumulation plan may temporarily slow down. This change in strategic pace also reflects the flexibility and risk control awareness of institutions in responding to market fluctuations.
As the first publicly traded company to hold a large amount of crypto assets, MicroStrategy has pioneered a new path of 'using Bitcoin as the underlying corporate asset.' Its successful experience has provided a template for later entrants (such as Tesla, Square, Nexon, etc.) and has sparked broader reflection on 'how crypto assets can optimize corporate asset allocation structures.' From the perspective of traditional enterprises, MicroStrategy's path is not merely an investment behavior; it is a comprehensive strategic choice to combat macro inflation, reconstruct capital efficiency, and capture market repricing. Currently, with the launch of Bitcoin spot ETFs and the continuous expansion of institutional entry channels, MicroStrategy's 'corporate holding' paradigm is transitioning from an individual case to a systematic trend, providing a solid example for the institutionalization process of the entire crypto market.
4.2 Bitmine
According to Bloomberg, Bitmine currently holds approximately 833,000 ETH, with a market value close to $3 billion, making it one of the largest institutional holders of Ethereum. Bitmine's strategy is significantly different from traditional Bitcoin-heavy companies, as its heavy investment in ETH indicates optimism about Ethereum's future ecological potential in smart contracts, L2 expansion, and asset tokenization.
4.3 Metaplanet
Japanese listed company Metaplanet recently increased its holdings by 463 BTC, with a total transaction amount of approximately $53.7 million, further boosting its total holdings. As a representative emerging Bitcoin investor in the Asian market, Metaplanet's continuous layout not only responds to the trend of gradually clearer digital asset regulation in Japan but may also inspire more Asian companies to undergo asset allocation transformation.
4.4 Sequans and GameSquare
In addition to Bitcoin, some companies are also starting to allocate other mainstream crypto assets. Sequans recently added 85 BTC, bringing its total holdings to 3,157 BTC, while GameSquare increased its holdings of ETH by 2,717, raising its total to 15,630 ETH. This indicates that some institutions are trying to optimize their crypto asset portfolios by diversifying their allocations of BTC and ETH. Additionally, an increasing number of companies are beginning to pay attention to emerging projects such as Solana, reflecting a rising interest in the 'new public chain' track.
Future Trends
With the clarification of the policy environment and the maturation of infrastructure, institutional investors are entering the crypto market at an unprecedented speed and depth. This trend is not a temporary craze but a strategic choice based on macro hedging needs, portfolio optimization goals, and expected technological dividends. The 'non-correlation' feature of crypto assets, high potential return space, and the increasing importance of underlying blockchain technology in financial infrastructure collectively form the fundamental reasons for institutional entry.
From an investment outcome perspective, despite the high volatility in the crypto market, mainstream assets (such as Bitcoin and Ethereum) have shown relatively robust long-term returns in the past few cycles. The rapid expansion of ETF products, the outperformance of on-chain fund strategies, and the relative resilience of multi-strategy funds in low-correlation market environments all validate the effectiveness of institutional capital allocation.
In the future, the forms of institutional investors' participation in the crypto market will become increasingly diverse and systematic. From entering through ETFs and structured products to the combination of RWA and on-chain securities issuance, to becoming node operators and protocol governors within ecosystems, even implementing 'model-as-investment' logic through AI model-driven on-chain strategy execution platforms—this all indicates that the crypto market is moving from a phase of capital injection to deeper institutional embedding and governance restructuring.
In this transformation process, early institutions will be not only financial investors but also designers and promoters of a new financial order. Crypto assets are no longer a playground for speculators but will become an indispensable part of the modern financial system.
References
• EY, https://www.ey.com/content/dam/ey-unified-site/ey-com/en-us/insights
• Our World Data, https://ourworldindata.org/grapher/consumer-price-index
• Stocklight, https://stocklight.com/stocks/us/nasdaq-mstr/microstrategy/annual-reports
• Bitbo, https://bitbo.io/treasuries/historical
