Institutional Investors Plan 83% Increase in Crypto Holdings by 2025

Institutional investors are increasingly optimistic about the future of cryptocurrency, with a significant majority planning to expand their allocations in the coming year. According to a survey conducted by Coinbase and EY-Parthenon, 83% of institutional decision-makers polled in January expressed intentions to increase their crypto holdings. This bullish outlook is fueled by improving regulatory clarity and the emergence of new use cases for digital assets.

The survey reveals a notable shift in how institutional investors view cryptocurrency. A majority of respondents (59%) plan to allocate more than 5% of their assets under management (AUM) to crypto by 2025. This indicates that digital assets are transitioning from a niche investment to a core component of institutional portfolios. The strong performance of the crypto market in 2024, characterized by the rising adoption of stablecoins, decentralized finance (DeFi), and tokenized assets, supports this trend.

Stablecoins have gained significant traction among institutional investors. The survey found that 84% of respondents are either currently using or considering stablecoins for purposes beyond transactions. Key drivers of this adoption include yield generation (73%), foreign exchange (69%), and internal cash management (68%). DeFi, although still in its early stages of institutional engagement, is poised for substantial growth. Currently, only 24% of investors are involved in DeFi, but this figure is expected to triple to 75% by 2027. Institutional investors are particularly interested in DeFi derivatives, staking, and lending products, highlighting the potential for DeFi to disrupt traditional financial services.

While Bitcoin (BTC) and Ethereum (ETH) remain the dominant cryptocurrencies in institutional portfolios, 73% of respondents reported holding at least one alternative cryptocurrency. XRP and Solana (SOL) were the most commonly held altcoins. Additionally, 68% of investors expressed interest in exchange-traded products (ETPs) offering single-asset exposure to these digital assets.

Despite the optimism, regulatory uncertainty remains a significant challenge. More than half (52%) of surveyed investors identified regulation as their top concern, followed by volatility (47%) and custody security (33%). However, 68% believe that greater regulatory clarity will drive the next wave of institutional crypto adoption. The report underscores a continued shift toward digital assets among institutional players, with increasing allocations, diverse use cases, and expanding product engagement. While regulatory developments and market fluctuations may introduce hurdles, the overall trajectory suggests sustained momentum for crypto in institutional portfolios.