What Happened?
Institutional investors’ confidence in cryptocurrencies has significantly increased, with plans to substantially increase their asset allocation in 2025. Over 80% of the surveyed institutions expect to raise their cryptocurrency investment ratio, with nearly 60% planning to allocate over 5% of their assets in this area. This indicates that cryptocurrencies are transitioning from niche assets to mainstream investments.
Institutional interest and application of stablecoins and decentralized finance (DeFi) have grown significantly, with a positive outlook for their diverse use cases. At the same time, institutional participation in DeFi is expected to increase significantly in the next two years.
Despite the optimism surrounding the prospects of cryptocurrencies, regulatory uncertainty remains the biggest concern for institutional investors and is also viewed as a key factor in driving further development in the industry.
Institutional Investors Optimistic About Cryptocurrency Outlook for 2025, Expect Significant Increase in Allocation
According to a global survey conducted by Coinbase, the largest U.S. exchange, and EY-Parthenon in January 2025, 352 institutional decision-makers were interviewed. The results show that institutional investors are generally optimistic about the prospects of cryptocurrencies in 2025. Following strong performance in 2024, cryptocurrencies have maintained their upward momentum into the new year, with surveyed investors full of confidence in the future.
The survey reveals that the vast majority (83%) of institutional investors plan to increase their cryptocurrency allocation in 2025, mainly because they believe cryptocurrencies will offer the most attractive risk-adjusted returns over the next three years.
Notably, 59% of the respondents plan to allocate more than 5% of their assets under management (AUM) to cryptocurrencies. This suggests that cryptocurrencies are gradually moving beyond niche asset categories and becoming a more significant part of institutional portfolios.
One of the factors driving increased interest from institutional investors is the expectation of clearer and more defined regulatory frameworks in the future, which will act as the best catalyst for new opportunities in digital assets.
Stablecoins and DeFi Set to Take Off
Stablecoins have also attracted widespread interest from institutional investors. The survey shows that 84% of respondents are currently “using or interested in using stablecoins.” They use stablecoins not only for cryptocurrency trading but also for other scenarios, including earning yields (73%), forex trading (69%), internal cash management (68%), and external payments (63%).
In addition to mainstream cryptocurrencies, nearly three-quarters (73%) of surveyed investors stated that their companies currently hold cryptocurrencies other than Bitcoin and Ethereum. Among them, XRP (Ripple) and Solana (SOL) tokens are the most commonly held assets.
Moreover, 68% of investors indicated they might also buy exchange-traded products (ETPs) for single assets like SOL and XRP.
If U.S. regulators approve the pending cryptocurrency spot ETF applications this year, the holdings of these altcoins (cryptocurrencies other than Bitcoin) may further increase.
Decentralized finance (DeFi) is also expected to experience significant growth. While only 24% of respondents currently participate in DeFi, this proportion is expected to grow to 75% over the next two years. Institutional interest in DeFi includes derivatives, staking, and lending, followed by acquiring alternative coins, cross-border settlements, and yield farming.
Regulatory Uncertainty Remains the Major Challenge
Although institutional investors are generally optimistic about the prospects of cryptocurrencies, challenges still remain. Among these, regulatory uncertainty is their main concern (52%), followed by market volatility (47%) and secure custodianship (33%).
However, 68% of investors believe that clearer regulation will serve as a catalyst for the next phase of growth in the digital asset industry.
Nonetheless, the survey results clearly indicate that institutional investors will continue to deepen their involvement in the cryptocurrency field in 2025. From increasing asset allocations and expanding use cases to adopting new financial products, all signs point to a strong willingness for positive development. While market volatility and factors like macroeconomics and geopolitics may present challenges in the short term, institutional investors’ optimistic outlook for cryptocurrencies is expected to persist, laying a solid foundation for the future development of the industry.
Source: Cointelegraph, Coinbase