After years on the sidelines, many traditional finance giants have begun investing in cryptocurrencies. Small retail investors own just about 9.5 per cent of the total bitcoin supply, and as more institutions warm up to crypto, rallies are relying less on retail enthusiasm and more on the risk appetite of portfolio managers.
According to a report by crypto trading firm Wintermute, institutional and retail investors chose different strategies during the crypto rally in the first half of 2025. Retail investors were drawn to memecoins and altcoins, but the big players doubled down on Bitcoin and Ethereum.
As a result, retail investment in spot ETFs fell in 2025, while institutional allocation skyrocketed. “Investors are no longer chasing the same trend. Institutions are treating crypto as a macro asset, while retail traders continue to gravitate to innovation,” said Wintermute CEO and Founder Evgeny Gaevoy.
From Meme Coins to IBIT
At the turn of the decade, the bull market was driven by retail traders, meme coins, and excessive speculation. Now pension funds, family offices, and corporate treasuries have taken the driver’s seat.
This year alone, crypto ETFs have grown by US$49 billion, according to CoinMarketCap. BlackRock’s iShares Bitcoin Trust (IBIT) now has an AUM of around US$87.17 billion, while Fidelity Wise Origin Bitcoin Fund (FBTC), the second-largest spot Bitcoin ETF, holds US$21.35 billion.
“We have just seen global digital asset fund flows surpass last year’s total inflows with US$48.67bn year-to-date,” said James Butterfill, head of research at CoinShares, in an X post.
This resulted in a steady bull run that was only undone by trade tensions between the US and China in October.
The Spot ETF Effect
The approval of spot crypto ETFs in 2024 has been the biggest driver of the current wave of institutional investment. Spot crypto ETFs have given banks, hedge funds, and other traditional financial institutions a less risky way to invest in cryptocurrency.
While early ETF flows were initially dominated by hedge funds and retail investors, capital from pension funds, endowments, and sovereign wealth funds began to flow into ETFs throughout 2025.
The Wisconsin Pension Board was among the first to invest in Bitcoin ETFs, and although the fund would sell its US$321.5 million investment in IBIT in May 2025, an increasing number of pensions have followed its lead and invested in spot crypto ETFs.
Crypto ETFs had US$170.05 billion under management as of November 4, 2025. 86.7 per cent of this was from Bitcoin spot ETFs, while Ethereum spot ETFs made up 13.2 per cent.
Regulatory Clarity
A favourable regulatory environment has, no doubt, played a key role in the current institutional influx of capital into cryptocurrency. After years of regulatory ambiguity, the election of Donald Trump in the US marked a major turning point.
Straight after his inauguration, the US president signed a series of executive orders to establish frameworks for market structure, creating the certainty institutions needed. The Securities and Exchange Commission (SEC) has also moved away from the adversarial “regulation by enforcement” and is now pushing for clearer rules.
MiCA implementation in the EU has resulted in several banks, including Bpifrance, ING, Garanti BBVA, and Société Générale, making significant allocations to digital assets. State-owned public investment bank Bpifrance (Banque Publique d’Investissement) announced a $27 million fund to invest directly into French crypto companies.
The Australian government is developing its first legal framework for digital assets. Like MiCA, the proposed draft is expected to make it easier for risk-averse institutions to invest in crypto.
Macro Tailwinds
Global liquidity is finally returning to digital assets after the US Federal Reserve cut rates twice in late 2025. In addition, weaker Treasury yields and renewed concerns about inflation have prompted portfolio managers to diversify away from cash-heavy positions.
Following the lead of pioneers like Strategy (formerly MicroStrategy), an increasing number of public companies, such as GameStop, KindlyMD, and Metaplanet, have adopted Bitcoin as a treasury reserve asset. GameStop Corp. announced in late May 2025 that it had purchased 4,710 Bitcoin, valued at approximately $500 million.
A New Favourable Market Structure
The gap between traditional finance and digital markets is increasingly narrowing. Besides asset managers like BlackRock, banks are also dipping their toes into the cryptocurrency world. JPMorgan is planning to launch a stablecoin, and its Kinexys platform has already processed billions of dollars in tokenised deposits daily.
One of the reasons institutional investors are becoming more open to crypto is the emergence of on-chain analytics firms that provide institutional-grade data for risk management, AML compliance, and proof-of-reserves verification.
In addition, regulated exchanges such as Nasdaq Digital Assets and EDX Markets have emerged to serve as trusted bridges for institutions wary of offshore platforms.
Why the 2025 Rally Feels Different
The 2025 crypto rally carries the familiar headlines of price surges and rising volumes, but everything else is different. We now have more funds coming in from large institutions than from retail investors, and that has played a significant role in reducing volatility. This has given birth to a more stable crypto rally, unlike previous cycles that were fuelled by social media enthusiasm.
