Introduction

After experiencing industry restructuring, a crisis of trust, and policy cleansing from 2022 to 2024, the cryptocurrency market in 2025 has ushered in a new round of transformation led by institutions. As regulatory frameworks become clearer and compliant channels fully open, crypto assets are gradually shedding their "marginal asset" label, becoming a "core allocation" in the portfolios of an increasing number of institutions.

The rise of this wave of "institutionalization" is driven by a series of landmark policies and market events:

• The passage of the "Genius Act" and the SEC's formal approval of spot Bitcoin ETFs in 2024 (including giants like BlackRock, Fidelity, and ARK) mark the full opening of mainstream compliant entry channels;

• The introduction of Hong Kong's "Stablecoin Regulation," which establishes a licensing system for stablecoin issuance, creating an Asia-leading regulatory framework for crypto assets;

• The full implementation of the European MiCA regulation, which unifies the regulation of stablecoins and crypto assets across 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," 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.

The clarification of regulations has driven the restoration of market confidence and the restructuring of capital. According to the "Institutional Digital Assets Survey" published by EY-Parthenon in 2025, over 86% of institutional investors globally have indicated that they have participated in or plan to invest in crypto assets within the next three years. Research from Nomura also shows that more than half of institutions in Japan have included digital assets in their strategic vision.

In this context, this report will systematically analyze the motivations of institutional investors in allocating crypto assets, focusing on the evolution of their investment strategies, differentiated allocation paths, and transformed market participation methods, and will reveal the structural opportunities in the crypto asset market in the "institutional era" through case studies.

Motivations for Institutional Entry

Digital assets, once viewed as "high volatility" and "high risk" marginal assets, are gradually evolving into an important allocation that cannot be ignored in institutional portfolios. According to various survey data, over 83% of institutional investors plan to continue or increase their digital asset allocations in 2025, with a significant proportion intending to "substantially increase" their investments. The motivations for institutional investors' allocations stem from the unique asset characteristics of digital assets, as well as the maturity of technological infrastructure and confidence in future technological trends.

2.1 High Returns and Diversification of Risk

Since 2012, the returns of cryptocurrencies like BTC have significantly outperformed traditional assets such as gold, silver, and the Nasdaq, with BTC's average annual return reaching 61.8%, while traditional institutional portfolios are facing diminishing marginal returns. Especially in the post-pandemic era, high inflation and uncertainty in policy interest rates have led institutions 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 its correlation to gold as low as 0.2-0.3, and its relationship with currencies and commodities in emerging markets (such as Latin America and Southeast Asia) becoming increasingly independent. This makes crypto assets an important tool for pursuing excess returns, hedging systemic risks, and optimizing the Sharpe ratio.

2.2 Strategic Demand for Inflation Hedging and Currency Depreciation Risks

Since the global quantitative easing that began in 2020, the prices of major asset classes across the globe have generally risen, making inflation the number one challenge for global investors. Crypto assets (especially BTC), with their technical attribute of a "fixed total supply of 21 million," are viewed as "digital gold," particularly suitable as a tool for hedging against 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 Improvements in Infrastructure and Settlement Efficiency

For a long time, a core concern for institutional investors regarding crypto assets has been the opacity of settlement processes, the lack of custody standards, and excessive counterparty risk. The early form of the crypto asset market resembled "shadow finance," lacking central clearing systems, regulated custodians, and standardized risk control mechanisms found in traditional finance. This created high uncertainty regarding the safe custody of funds and post-trade asset settlement, which is particularly high-risk for large institutional investors.

However, in recent years, the infrastructure of the entire crypto asset market has undergone a qualitative leap, especially in the following key areas:

• Custody services have entered a compliant track

Currently, several custody service providers have obtained trust licenses from 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 Asian and European markets. These institutions can implement traditional security mechanisms such as cold wallet isolation and multi-signature management, along with insurance solutions, anti-attack systems, and real-time audits to enhance the trust level of fund storage.

• Clearing systems and matching mechanisms are becoming more specialized

At the trading level, the previous CEX and OTC trading processes often faced delays and counterparty default risks due to the lack of clearing intermediaries. Platforms like Gate and financial institutions have begun to introduce clearing and matching mechanisms that are closer to traditional finance.

• Enhanced settlement efficiency leads to cost reduction and upgraded risk control

In traditional markets, cross-border payments and securities clearing often take several days and incur high costs. The on-chain settlement mechanism in the crypto market inherently offers high efficiency and low dependence on intermediaries, combined with the aforementioned custody and clearing infrastructure to achieve: T+0 trading settlement efficiency and 24/7 operational mechanisms, breaking the time constraints of traditional financial markets and supporting the synchronized circulation of global assets.

2.4 Technology-Driven Future Participation in New Business Models

The entry of institutions into the crypto market is also a strategic choice to "bet on future technological 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 RWA on-chain bond issuance

• Citibank has launched a tokenized deposit experimental platform

• JPMorgan has deployed the Onyx project to achieve on-chain corporate settlement

In these transformation processes, early participants have a first-mover advantage.

2.5 Client Demand and Preferences of the New Generation of Assets

Many institutional investors, especially pension funds and insurance companies, are experiencing a "generational shift" in their audience structure. Generation Z and millennials are more familiar with digital assets, compelling institutions to reassess their allocation models. A 2024 report from Fidelity indicates that nearly 60% of millennial clients want their retirement accounts to include BTC or ETH. This change accelerates the diversification and popularization of institutional products.

Analysis of Institutional Investment Strategies

As the crypto market gradually institutionalizes and matures in asset structure, the participation methods of institutional investors are also becoming increasingly diversified. From "tentative positions" to "portfolio strategy construction," institutional investment is showing significant characteristics of stratification, strategization, and structuring. This chapter systematically reviews the typical entry strategies and asset preferences of different institutions in crypto asset investment from three dimensions: institution type, operational style, and allocation path.

3.1 Classification by Institution Type: Heterogeneity-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 funds/sovereign wealth funds, and university endowment funds, each exhibiting highly differentiated investment paths in the crypto market.

3.1.1 Family Offices

• Have a high risk tolerance and acceptance of asset innovation, with flexible allocation goals;

• Prefer early-stage token projects, crypto-native risk funds, and on-chain yield strategies;

• Often adopt direct holding of tokens, participating in token private placements, or indirectly investing through Web3 funds.

Case Study: 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 and Oracles).

3.1.2 Pension Funds and Sovereign Wealth Funds

• Pursue long-term stable returns and macro hedging capabilities, with a conservative allocation style;

• More inclined towards compliant products, such as spot ETFs and bond-type RWAs (Real-World Assets);

• Typically gain exposure to crypto assets indirectly through large asset management platforms (such as BlackRock and Fidelity).

Case Study: Norway's sovereign fund Norges Bank disclosed in its 2024 annual report that it holds shares 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;

• Participate through well-known Web3 funds (such as a16z crypto, Paradigm, Variant);

• More inclined towards early-stage investments in sectors such as Layer2, privacy computing, and AI+Crypto.

Case Study: Endowment funds from Harvard, MIT, and Yale have long been invested in Web3 funds, showing high participation in data composability and foundational protocol layers.

3.2 Classification by Operational Style: Coexistence of Active and Passive Strategies

The operational styles of institutions regarding crypto assets can be roughly divided into active management and passive allocation types, reflecting differentiated preferences for risk-return structures and operational resource investments.

3.2.1 Active Allocation Strategies

• Build their own research teams, deeply engage in on-chain data analysis and off-chain valuation modeling;

• Strategies encompass arbitrage, staking, DeFi liquidity mining, gamma (volatility) strategies, protocol governance, etc.;

• Emphasize strategy flexibility and capturing cutting-edge sectors, with investment structures typically involving multi-chain, multi-asset, and cross-protocol combinations.

Case Study: Franklin Templeton has built a crypto fund management platform, providing staking-as-a-service, DeFi liquidity deployment, and other services, representing a typical example of active strategy institutionalization.

3.2.2 Passive Allocation Strategies

• Often use ETFs, structured notes, fund shares, and other forms for indirect holdings;

• Emphasize the controllability of net asset value fluctuations and the transparency of risk exposure;

• The focus is on high market cap assets like BTC and ETH, with occasional allocations to stablecoin yield strategies.

Case Study: The "Multi-Asset Digital Index Fund," launched in 2025, has gained favor among pension funds and insurance institutions for building a low-correlation asset pool.

3.3 Classification 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 instead construct asset sub-systems through strategic combinations. The main allocation paths can be summarized into three categories:

3.3.1 Mainstream Asset Allocation (BTC / ETH)

• As core assets of "digital gold" and "Web3 operating systems," mainstream coins form the foundation of most institutional asset pools;

• BTC typically serves the functions of value storage and inflation hedging;

• ETH represents a structural bet on ecosystems such as on-chain economy, DeFi, and RWA.

3.3.2 Thematic Track Allocation

• Focuses on high-growth, high Beta emerging directions, such as Layer2 (Arbitrum), modular blockchains (Celestia), AI-driven protocols (Bittensor), and decentralized storage (Arweave);

• Investment methods primarily involve early-stage private placements and fund share subscriptions, suitable for institutions with high-risk tolerance;

• Often used to capture structural dividends and medium to long-term return potential.

3.3.3 Infrastructure and Compliance Service Allocation

• Allocation targets include equity in compliant custody institutions (e.g., Anchorage), on-chain risk control platforms, and DePIN (Decentralized Physical Infrastructure Networks);

• Viewed as non-coin targets with policy moats and long-term technological value;

• Suitable for sovereign funds, university funds, and other institutional investors with strategic expectations for "crypto ecosystem infrastructure."

3.4 Summary: Structural Evolution of Strategy Lineage

Through a three-dimensional cross-analysis of institution types, operational styles, and allocation paths, it is evident that institutional investment in crypto assets has far surpassed the "buying coins" level and is instead constructing a structured asset allocation system of "multi-strategy, multi-path, and cross-track." This evolution of strategy lineage reflects institutions' upgraded understanding of asset nature and macro logic, as well as their deep engagement with technological paths, governance structures, and policy trends.

In the future, as compliant products continue to diversify and infrastructure matures further, the strategy lineages of different types of institutions will become increasingly diversified and finely layered, establishing a stable anchor position for crypto assets within the global asset allocation system.

Representative Cases

In the past year, institutional interest in crypto assets has continued to rise, with several publicly traded 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 traditional financial capital's recognition of the crypto market but also highlights the potential of assets like Bitcoin in inflation hedging and asset diversification.

4.1 Strategy

MicroStrategy (NASDAQ: MSTR) was originally a traditional tech company focused on business intelligence (BI) software, founded in 1989, and has long specialized in enterprise data analysis and reporting services. Despite serving multiple large enterprise clients, its main business has seen slow growth over the past decade, facing growth bottlenecks in revenue scale and profitability. In the context of changing macro environments, increasing inflation pressures, and declining returns on fiat assets, the company's management began to rethink the structure of its balance sheet and the efficiency of corporate capital allocation. In 2020, under the leadership of then-CEO Michael Saylor, MicroStrategy embarked on a highly controversial yet forward-looking strategic transformation: to adopt Bitcoin as the company's primary reserve asset.

In August 2020, MicroStrategy purchased 21,454 BTC for $250 million, and subsequently increased its total holdings to over 620,000 BTC through multiple rounds of purchases from 2020 to 2024, with a total acquisition cost exceeding $21 billion. Notably, this series of purchases did not rely solely on the company's own funds but implemented a "financing leverage" strategy through various capital market tools (including issuing convertible bonds, private placements, and ATM stock financing) 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," with its stock price highly positively correlated with BTC, viewed by investors as an early alternative to ETFs.

This combination strategy of "corporate holding + market financing + BTC asset revaluation" has profoundly impacted MicroStrategy's operational landscape. The Q2 2025 financial report shows that while the software business remains stable, the paper appreciation of BTC holdings has become the company's primary source of profit; the company's quarterly net profit reached $10 billion, and its stock price rose over 39% within the year. This outcome not only reshaped its capital market image but also significantly enhanced the company's liquidity and balance sheet strength.

In early July 2025, MicroStrategy 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, MicroStrategy did not release new purchase information, leading the market to speculate that its accumulation plan might temporarily slow down. This change in strategy rhythm also reflects the flexibility and risk control awareness of institutions in responding to market volatility.

As the first publicly traded company to hold crypto assets on a large scale, MicroStrategy has pioneered a new path of "using Bitcoin as the underlying corporate asset." Its successful experience has provided a model for later entrants (such as Tesla, Square, Nexon, etc.) and has sparked broader discussions 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 but a comprehensive strategic choice to combat macro inflation, reconstruct capital efficiency, and seek market repricing. Currently, with the launch of spot Bitcoin 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 template 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 significantly differs from traditional Bitcoin-heavy companies, as its heavy allocation in ETH indicates its optimism about Ethereum's future ecological potential in smart contracts, L2 expansion, and asset tokenization.

4.3 Metaplanet

The Japanese publicly traded 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 continued investments not only respond to the gradually clearer trend of digital asset regulation in Japan but may also inspire more Asian companies to undergo asset allocation transformations.

4.4 Sequans and GameSquare

In addition to Bitcoin, some companies have also begun to allocate other mainstream crypto assets. Sequans recently added 85 BTC, bringing its total holdings to 3,157 BTC, while GameSquare increased its holdings by 2,717 ETH, raising its total to 15,630 ETH. This indicates that some institutions are attempting to optimize their crypto asset portfolios by diversifying their allocations in BTC and ETH. Additionally, an increasing number of companies are beginning to pay attention to emerging projects like Solana, reflecting a rising interest in the "new public chain" track.

Future Trends

As the policy environment clarifies and infrastructure matures, institutional investors are entering the crypto market at an unprecedented speed and depth. This trend is not a temporary phenomenon but a strategic choice based on macro hedging needs, portfolio optimization goals, and expectations of technological dividends. The "non-correlation" characteristics of crypto assets, high potential return space, and the increasing importance of underlying blockchain technology in financial infrastructure collectively constitute the fundamental motivations for institutional entry.

From an investment outcome perspective, although the crypto market exhibits high volatility, mainstream assets (such as Bitcoin and Ethereum) have demonstrated relatively robust long-term performance over the past several 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 participation in the crypto market will become increasingly diversified and systematic. From entering through ETFs and structured products to combining RWA and on-chain securities issuance, to becoming node operators and protocol governors within ecosystems, and even implementing "model-as-investment" logic through AI model-driven on-chain strategy execution platforms—these all indicate that the crypto market is transitioning from a phase of capital injection to deeper institutional embedding and governance reconstruction.

In this transformation process, pioneering institutions will not only be financial investors but also designers and promoters of a new financial order. Crypto assets will no longer be 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

Disclaimer

Investing in the cryptocurrency market involves high risks. Users are advised to conduct independent research and fully understand the nature of the assets and products they purchase before making any investment decisions. Gate does not assume any responsibility for any losses or damages resulting from such investment decisions.

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