Crypto News

Institutional Investors Embrace Crypto: 83% Plan Increased Allocation by 2025, Revealing a Shift in Financial Strategies

March 19, 2025
Smart Money

Increased Institutional Investment in Cryptocurrency Anticipated in 2025

A recent report from Coinbase and EY-Parthenon indicates a significant shift in the investment landscape, revealing that a substantial 83% of institutional investors plan to increase their allocation of funds to cryptocurrency holdings by 2025. This finding emerges from a survey conducted with decision-makers in 352 companies, highlighting a growing confidence in the cryptocurrency market’s potential for strong returns.

A Change in Investment Strategies

Published on March 18, the report sheds light on evolving attitudes toward digital assets among institutional investors. Notably, more than half of the participants (59%) intend to allocate at least 5% of their assets under management to digital assets within this year. This trend marks a pivotal moment as cryptocurrency increasingly transcends its previous status as a niche investment and is now being recognized as a core component of institutional portfolios.

The Rise of Stablecoins

A striking 84% of investors indicated that they are either currently using or considering the use of stablecoins. These digital currencies, which have gained momentum over the past year, have historically served primarily as a means to facilitate cryptocurrency transactions. However, institutions are now beginning to explore a broader array of applications for stablecoins, including yield generation, foreign exchange, cash management, and payments.

Interest in Decentralized Finance

The report also highlights a rising interest in decentralized finance (DeFi). While only 24% of surveyed investors are currently engaged with DeFi, this figure is expected to surge to 75% within the next two years. Many businesses view DeFi as an opportunity to access diverse financial markets, including lending, derivatives, and staking.

Alternative Cryptocurrency Holdings

Interestingly, 73% of respondents reported owning assets beyond the leading cryptocurrencies Bitcoin (BTC) and Ethereum (ETH). The interest in alternative cryptocurrencies, or altcoins, remains robust, with Ripple (XRP) and Solana (SOL) being the most commonly held among investors. Many are also considering single-asset exchange-traded products (ETPs) for investing in altcoins, reflecting a diversification trend in cryptocurrency investments.

Challenges Loom Ahead

Despite the optimistic outlook, there are notable challenges that investors must navigate. The survey identified regulatory uncertainty as the top concern for 52% of respondents, followed closely by market volatility at 47% and secure custody at 33%. A substantial 68% of those surveyed believe that implementing more transparent regulations will be crucial for facilitating future market expansion.

New Innovations in Tokenized Assets

In an exciting development related to institutional investment in cryptocurrency, Securitize and Ethena Labs recently launched Converge on March 17. This blockchain initiative is designed to bolster institutional adoption of tokenized assets. Supported by prominent companies including Aave Labs, Pendle, and Maple Finance, Converge aims to bridge the gap between decentralized finance and traditional finance by offering a regulated environment for tokenized assets.

As the cryptocurrency landscape continues to evolve, the indications from this latest report suggest that institutional interest is set to grow significantly, paving the way for an increasingly integrated financial future.