Institutional investors are showing a strong appetite for cryptocurrency, with 83% planning to increase their allocations in 2025, according to a March 18 report by Coinbase and EY-Parthenon.
The survey, which gathered insights from over 350 financial institutions, highlights that nearly three-quarters of firms already hold cryptocurrencies beyond Bitcoin (BTC) and Ethereum (ETH). A significant number of respondents plan to allocate at least 5% of their portfolios to digital assets in the near future.
The primary motivation? Institutions believe crypto offers the best opportunity for attractive risk-adjusted returns over the next three years.
Altcoins Gain Institutional Favor
While Bitcoin and Ethereum remain dominant, institutions are expanding their exposure to altcoins, with XRP and Solana (SOL) emerging as top picks among investors.
This growing interest could surge even further if the U.S. Securities and Exchange Commission (SEC) approves pending altcoin exchange-traded funds (ETFs).
According to Bloomberg Intelligence, upcoming ETFs for Litecoin (LTC), Solana (SOL), and XRP could mark a significant shift in institutional engagement with alternative cryptocurrencies.
Further signaling institutional adoption, the Chicago Mercantile Exchange (CME) Group recently launched futures contracts tied to Solana on March 17, indicating a wider acceptance of altcoins in traditional finance.
Stablecoins and DeFi on the Rise
The report also reveals that 84% of institutions are either holding stablecoins or actively exploring their use. Unlike retail investors who primarily use stablecoins for transactions, institutions are leveraging them for:
- Generating yield (73%)
- Foreign exchange transactions (69%)
- Internal cash management (68%)
- External payments (63%)
Moreover, the institutional adoption of decentralized finance (DeFi) platforms is set to expand dramatically. While only 24% of institutions currently use DeFi, the figure is projected to triple to nearly 75% within two years.
Key areas of institutional interest in DeFi include:
- Derivatives trading
- Staking and lending
- Cross-border settlements
- Yield farming
The Future of Institutional Crypto Investment
With stablecoin adoption accelerating and DeFi platforms becoming more institutional-friendly, the next few years could see an unprecedented wave of capital flowing into the crypto sector.
As regulatory clarity improves and crypto ETFs gain approval, financial institutions are positioning themselves to capitalize on the growing digital asset market.