Institutional capital now dominates crypto

Hong Kim and Elliot Andrews stated that institutional investors are replacing retail traders in the crypto market’s dominance, as they spoke at the Token49 event in Singapore. They cited the rise of regulated investments, such as spot Bitcoin ETFs, which have attracted over $50 billion in inflows since their launch. 

The Chief Technology Officer and co-founder of Bitwise said the Bitcoin investor base has shifted from short-term retail speculation to sustained institutional allocation. He noted that the first year of Bitcoin ETFs saw about $30 billion of inflows, and he believes the momentum will continue.

Kim says the launch of the Bitcoin ETFs was the ‘IPO moment’ for Bitcoin

While speaking at the Token49 event in Singapore, Hong Kim, CTO and co-founder of Bitwise, noted that the launch of spot Bitcoin ETFs marked what he described as ‘Bitcoin’s IPO moment’.

He added that public companies, asset managers, and family offices took the stage and now dominate trading flows, which retail traders once dominated. He believes the new phase marks the maturity of the market and will create a sustainable demand that is less reactive to short-term price changes.

SoSoValue data shows that the U.S. spot Bitcoin ETFs now hold a total net assets of $167.37 billion, which is roughly 6.78% of the total Bitcoin Market cap, and cumulative net inflows of $61.24 billion. Kim says the growth has been fueled by the growing presence of institutional investors, including traditional finance investors who are supported by favorable custody and compliance infrastructure. 

Ethereum ETFs, on the other hand, have also recorded notable inflows, hitting all-time highs in August. U.S. ETH spot ETFs currently hold $30.86 billion in total net assets, representing approximately 5.67% of the Ethereum market cap.

The fund also has cumulative net inflows of $15.02 billion since its launch. BlackRock’s iShare Ethereum Trust leads with a 3.33% share that is close to $18.14 billion in net assets, followed by Grayscale’s Ethereum Trust, with a 0.88% share representing $4.78 billion in net assets.

For BTC, the Fidelity Wise Origin Bitcoin Fund (FBTC) holds a 1.04% share, representing $25.21 billion in net assets, followed by Grayscale’s Bitcoin Trust (GBTC), which holds a 0.88% share, representing $21.48 billion in net assets as of now. Kim says the custody question has largely been solved, citing regulated providers such as Coinase, Anchorage, and Fidelity. He also pointed out the recent clarification from the Securities and Exchange Commission (SEC) confirming that state-chartered trusts now qualify as custodians.

Aspen Digital CEO says clients want risk-adjusted performance

According to Elliot Andrews, CEO of Aspen Digital, family offices and wealthy clients view digital assets as a long-term investment option. He noted that the days of chasing hundred times returns are over, and now clients are primarily interested in consistent and risk-adjusted performance. He believes crypto forms part of a diversified portfolio, noting that the political and regulatory conditions in the U.S. and abroad have improved investor confidence. 

Chainlink Co-Founder Sergey Nazarov echoed the same remarks in March, noting that Fund tokenization by the world’s largest asset managers, such as BlackRock and Fidelity International, is driving the next stage of digital asset adoption by the entire financial industry.

Hong Kim noted that both retail and institutional investors are viewing Bitcoin as a form of protection against currency debasement. Currently, both the House of Representatives and the Senate remain divided over the following federal funding bill.

The Republican-controlled House seeks a clean resolution, and Senate Democrats push for policy conditions, creating uncertainty. The stalemate has fueled Bitcoin’s position as a hedge against the potential weakening of the U.S. dollar, driving Bitcoin’s price to a new all-time high of $126,198.07 on October 6.

If you're reading this, you’re already ahead. Stay there with our newsletter.