Big investors increase their allocations to crypto

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As the debate continues over the real worth of many digital assets, institutional investors seem to be voting with their feet in favor of bitcoin and other cryptocurrencies.

Among 352 such investors surveyed in January by EY-Parthenon in collaboration with cryptocurrency exchange operator Coinbase, a large majority (83%) said they plan to increase their allocations to digital assets over the coming year.

About three in five respondents (59%) said they planned to allocate more than 5% of their assets under management to cryptocurrencies in 2025.

The incoming, pro-crypto Trump Administration drove much of the sentiment, with 60% of those polled saying they expected both investors and financial institutions to be more interested in digital assets this year specifically as a result of the 2024 U.S. election.

Notably, the poll — which included asset managers and owners, family offices, private banks, hedge funds and venture capital firms — was taken before President Trump’s Jan. 23 executive order in support of digital assets, which may have galvanized even more institutional investors to raise their valuations of cryptocurrencies.

Not surprisingly, the surveyed institutional investors were most attracted by the earnings opportunity digital assets offer. Asked to name the top three reasons for their interest in digital assets, 59% pointed to higher returns compared to other asset classes. 

Further, 68% of the respondents saw crypto as among the three biggest opportunities to generate attractive risk-adjusted returns. That far surpassed U.S. equities, which was next on the list at 40%. Additionally, 79% of respondents said they expected cryptocurrency prices to rise.

Hedge funds and family offices were especially bullish, with 25% of them saying they planned to “significantly increase” digital asset holdings this year, compared with a 12% average for the other institutional investor types.

Investment diversity in the space is also increasing, with 73% of those polled saying they held one or more “altcoins” in addition to Bitcoin and Ethereum. 

The report lists four substantive reasons to believe in this bull cycle:

1. The market is more mature and resilient.

2. The introduction of Exchange-Traded Products for Bitcoin, Ethereum and other digital assets has expanded market participation.

3. There is a positive outlook on the evolving regulatory environment, particularly across the United States and the European Union. In fact, 57% of survey respondents cited expected regulatory clarity as among the top three catalysts for the next phase of growth for the digital assets industry.

4. The underlying technology has progressed over the past few years.