Trending
There’s no denying that cryptocurrency has been an adventurous place to be in the first quarter and that’s putting things mildly.
Even when accounting for many market participants coming to the realization that memecoins are nothing but a corrupt, mostly worthless of a wild west casino, the broader cryptocurrency space has subjected investors to turbulence and disappointment. The latter is born out of expectations – largely met – that President Trump would be the most pro-crypto president to date. Love him or hate him, he’s made good on that pledge and bitcoin would still need to gain about 25% to reclaim its all-time high.
For advisors and crypto-enthused clients, 2025 is proving to be a trying environment, but it could also serve the object of emphasizing the theme of seeing the forest through the trees. That’s easier said than done, but it can be accomplished with some assistance.
That aid may just be found in a new survey conducted by Coinbase and EY-Parthenon in January. Starting with one of the headline numbers, 86% of the institutional investors polled said they plan to be or already are exposed to crypto this year.
More Encouraging Signs
As advisors know, institutional investors, be they endowments, hedge funds, pensions and others, have the firepower to affect securities’ prices across a variety of asset classes. That is to say following their lead, while not a guarantee of good returns, can be a step in the right direction. For crypto fans, the Coinbase survey contains more important, related details.
“An overwhelming majority (83%) of surveyed investors plan to increase their allocations to crypto in 2025, driven by their view that cryptocurrencies represent the best opportunity to generate attractive risk-adjusted returns over the next three years,” according to the survey. “A clear majority (59%) of surveyed investors plan to allocate more than 5% of their AUM to crypto in 2025 as the asset class further cements its role in institutional portfolios.”
In simple terms, market participants responsible for large sums of capital that “know what they’re doing” are highly likely to be increasing their crypto allocations this year. Chances are those allocations will largely be directed to bitcoin, ethereum, stablecoins and a handful of other credible digital assets.
“Of course, progress never takes place in a straight line, and setbacks are inevitable on the march forward,” adds Coinbase. “The volatility we’ve seen in the first quarter is a reminder that markets can get ahead of themselves, and that crypto is not immune to the forces shaping the macroeconomic landscape or the shifting tides of geopolitics.”
Pros Branching Out
Not surprisingly, the bulk of institutional investors’ crypto exposure is comprised of bitcoin and ethereum – by far the two largest members of the asset class. Stablecoins likely comprise the bulk of the rest of the rest of those allocations.
Where institutional investors are currently light on crypto is in the altcoin space. In a sign of a possible rise in cryptocurrency animal spirits, these market participants may increase exposure, with the help of ETFs, to altcoins this year.
“It should be noted, however, that most investors hold just one or two altcoins, with Ripple (XRP) and Solana (SOL) being the most common,” concludes CoinBase. “Investors also signaled their interest in accessing altcoins via ETPs, with 68% indicating that they would be likely to purchase single-asset ETPs for altcoins such as SOL and XRP.”
Related: Sizing up SPUT as Compelling Covered Call Alternative