Bitcoin’s recent surge to a record-breaking $123,000 has reignited discussions around institutional investors’ role in driving up prices. While the buzz surrounding digital assets grows, experts believe that the involvement of institutional investors remains in its infancy.
Adrian Fritz, head of research at 21Shares, shares that we’re still “in the early innings” of institutional ownership in the crypto space. Retail investors continue to dominate the market, with less than 5% of spot bitcoin ETF assets held by long-term investors like pension funds. Another 10%–15% is owned by hedge funds or wealth management firms. However, much of the wealth manager ownership is tied to high-net-worth retail clients.
Crypto market dynamics also reflect the correlation between soaring retail purchases of crypto ETFs and the price hikes. Retail investors were particularly active during key moments, such as late 2024 when Donald Trump’s presidential win spurred excitement, and more recently during the ongoing rally.
Government action is another catalyst. This week, U.S. lawmakers are expected to pass a range of crypto-focused bills, with the “Genius Act” being one of the most consequential. It will provide clarity on stablecoins, a fast-growing segment of the crypto market. The proposed bills aim to regulate digital commodities and lay out the roles of agencies overseeing digital assets, creating a clearer framework for institutional investment.
Large U.S. financial institutions such as Bank of America and Citigroup are also working on stablecoin projects, further bolstering crypto’s institutional appeal. TP ICAP’s Simon Forster predicts a substantial increase in institutional participation by 2026.
Bitcoin treasury companies are also emerging as a significant force in demand. Companies like Strategy (MSTR.O) and GameStop (GME.N) are now focusing on holding bitcoin on their balance sheets, alongside traditional assets like cash and gold. Public companies globally have increased their bitcoin holdings by 120% since last July, holding over 859,000 bitcoins, or 4% of the total supply.
Despite this, analysts caution that a dip below $90,000 for Bitcoin could put many corporate treasuries in a vulnerable position.
The rise in demand for crypto ETFs is another positive sign. According to Bitwise, global net inflows into crypto exchange-traded products hit a record $4 billion last week, marking the highest inflows of the year.
As of now, Bitcoin has gained 25% this year, outpacing the S&P 500’s 6.5% increase. Ether is up 2%, while XRP has surged nearly 40%. The total market capitalization of the crypto sector now stands at $3.8 trillion, reflecting a nearly 66% increase since the U.S. elections.
