Institutional Investors Return to Crypto as ETFs, Prediction Markets Surge

Institutional capital is flowing back into digital assets, but this cycle looks very different from the last one.

Prediction markets are beginning to attract serious attention from Wall Street, Bitcoin exchange-traded funds (ETFs) are once again seeing large inflows and venture giant a16z is loading up another multibillion-dollar crypto war chest. Meanwhile, traditional banks are quietly accelerating their push into tokenized finance infrastructure.

Taken together, this week’s Crypto Biz points to a broader shift underway across the industry. Crypto companies are no longer just chasing retail traders — they’re increasingly building products for asset managers, banks, hedge funds and institutional investors looking for regulated ways to access digital assets.

Prediction markets court institutional capital

Prediction markets are beginning to attract institutional interest after Kalshi executed what analysts at Bernstein described as the sector’s first bespoke institutional block trade. The transaction involved a custom contract tied to California carbon allowance auctions and was facilitated with liquidity support from Jump Trading.

In a recent note to clients, Bernstein analysts said the trade marks an important step in the evolution of prediction markets from primarily retail-driven speculation into a more mature financial product category. Institutional investors are increasingly exploring event contracts tied to macroeconomic policy, elections and geopolitical developments as hedging tools.

The report also highlighted how regulated infrastructure is becoming a bigger focus for the sector. Kalshi operates under regulatory oversight in the United States, while decentralized rivals have largely grown through crypto-native platforms outside traditional financial rails. Bernstein believes broader institutional participation could eventually push prediction market volumes into the trillions of dollars.

Kalshi’s largest active event contracts. Source: Bernstein

Bitcoin ETFs see $1 billion in inflows as BTC retakes $80,000

US spot Bitcoin ETFs recorded nearly $1 billion in inflows as BTC climbed back above the $80,000 mark, highlighting renewed institutional demand for crypto exposure. 

The inflows marked one of the strongest single-day performances for the ETF sector in recent months and coincided with broader strength across digital asset markets, according to SoSoValue data. 

Analysts believe the ETF demand reflects improving investor sentiment and continued accumulation from institutional buyers using regulated investment products to gain Bitcoin exposure. The latest inflows build on an impressive April, when Bitcoin ETFs pulled in $1.97 billion.

Bitcoin ETF inflows accelerated after BTC reached $80,000. Source: SoSoValue

A16z crypto raises $2 billion for next wave of crypto funding

Andreessen Horowitz’s crypto venture arm, a16z crypto, has raised $2 billion for a new crypto-focused investment fund, marking one of the largest venture capital commitments to the sector in years. 

The fund will target crypto startups spanning blockchain infrastructure, Web3 applications and decentralized finance. It comes as venture activity begins showing signs of recovery after a prolonged slowdown across digital asset markets. While crypto funding remains well below 2021 levels, venture capital continues to invest in early-stage companies building core industry infrastructure.

A16z has remained one of crypto’s most influential venture investors through the market downturn, backing projects across gaming, stablecoins, developer tooling and decentralized networks. 

Source: a16z crypto

Tennessee bankers select Stablecore for digital asset services

The Tennessee Bankers Association has selected Stablecore as its preferred digital asset infrastructure provider, opening the door for roughly 175 member banks to access crypto-related banking services. 

The partnership is focused on helping financial institutions integrate stablecoins, tokenized deposits and other blockchain-based payment tools into their operations.

Stablecore provides backend infrastructure that allows banks to offer digital asset services without building their own crypto technology stack. The company said its platform supports tokenized assets, stablecoin functionality and compliance integrations for regulated financial institutions.

The agreement reflects growing interest among regional and community banks in digital asset infrastructure as traditional finance moves deeper into blockchain payments and tokenization. 

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