Crypto’s Retail Era Is Over: Institutions Now Set the Market’s Pace, Experts Say

Institutional capital is increasingly steering the direction of the crypto market, executives from Bitwise Asset Management and Aspen Digital told Decrypt in separate interviews during the Token2049 conference in Singapore last week. 

Hong Kim, Chief Technology Officer and co-founder of Bitwise, said the investor base for Bitcoin has shifted from retail traders to long-term allocators. 

“The first year of Bitcoin ETFs saw about $30 billion of inflows; this year we’ve already added another $20 billion,” he said. “Every quarter, we’ve had steady inflows of $5 to $10 billion. It’s not stopping.”

Kim described the launch of spot Bitcoin exchange-traded funds as “the IPO moment for Bitcoin,” noting that public companies and professional investors now drive flows. 

He said the steady pace of inflows reflects a more durable form of demand than in previous market cycles.

U.S. spot Bitcoin exchange-traded funds now hold more than $169 billion worth, equivalent to roughly 6.8% of the asset’s total market value, according to data provider SoSoValue. 

Elliot Andrews, chief executive of Aspen Digital, said family offices and high-net-worth clients are treating crypto as a long-term allocation rather than a speculative trade.

“The days of chasing 100x returns are over,” he told Decrypt. “Clients want consistent, risk-adjusted performance. For most, crypto sits as a small but meaningful part of a diversified portfolio.”

Both executives said the infrastructure underpinning institutional participation has matured. 

Kim said custody for institutional products “has largely been solved,” citing providers such as Coinbase, Anchorage, and Fidelity. He pointed to the U.S. Securities and Exchange Commission’s recent clarification that state-chartered trusts qualify as custodians.

Andrews, meanwhile, said structural and political changes in the U.S. and abroad have helped alleviate concerns wealthy clients had when investing in crypto.

“The reason we exist is because private banks wouldn’t touch crypto when we started,” he said. “Their clients wanted exposure, but the banks needed a trusted venue to send them to.

Analysts say the growth of institutional vehicles has helped reduce volatility by replacing short-term speculative trading with steady inflows from wealth managers and investment advisers.

That has helped drive Bitcoin’s price to a new all-time high this month, after the asset climbed more than 8% following the U.S. government’s announcement of a partial shutdown, affecting some services.

Both chambers of Congress remain deadlocked over the next funding bill. The Republican-controlled House wants a clean resolution, while Senate Democrats and moderates are demanding policy conditions before passage.

In light of these demands, retail and institutional investors alike are increasingly viewing Bitcoin as a hedge against the debasement of the U.S. dollar, a point both Kim and Andrews cited as a significant reason for the global interest this year.

“The volatility will come in bursts,” Kim said, referring to Bitcoin’s steady climb and investor participation, “but the underlying story is one of steady accumulation.”