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Institutional investors are increasingly bullish on cryptocurrency, with 83% saying they plan to up crypto allocations in 2025, according to a March 18 report by Coinbase and EY-Parthenon.
Already, nearly three-quarters of firms surveyed said they hold cryptocurrencies other than Bitcoin (BTC) and Ether (ETH), and a “significant majority” said they plan to boost crypto allocations to 5% or more of their portfolios, the report said.
They are motivated by the view that “cryptocurrencies represent the best opportunity to generate attractive risk-adjusted returns over the next three years,” according to the report.
Coinbase, the US’ largest crypto exchange, and EY-Parthenon, a consultancy, based the findings on interviews with more than 350 institutional investors in January.
Among institutional altcoin holdings, XRP (XRP) and Solana (SOL) are the most popular, the survey found.
Coinbase and EY-Parthenon surveyed more than 350 financial institutions on crypto. Source: Coinbase
Related: Stablecoin adoption, ETFs to propel crypto performance in 2025: Citi
Altcoin ETFs incoming
Altcoin holdings could rise even further if US regulators approve planned exchange-traded fund (ETF) listings this year.
Asset managers are awaiting a greenlight from the US Securities and Exchange Commission to list more than a dozen proposed altcoin ETFs.
Litecoin (LTC), SOL and XRP are seen as the most likely to see near-term approval, according to Bloomberg Intelligence.
On March 17, the Chicago Mercantile Exchange (CME) Group, the largest US derivatives exchange by volume, launched futures contracts tied to SOL, marking a significant step toward institutional adoption of the altcoin.
Stablecoins and DeFi take off
Meanwhile, stablecoins continue to see institutional uptake, with 84% of respondents either holding stablecoins or exploring doing so, the survey found.
According to the report, institutions are using “stablecoins for a variety of use cases beyond just facilitating crypto transactions, including generating yield (73%), foreign exchange (69%), internal cash management (68%), and external payments (63%).”
In December, investment bank Citi said stablecoin adoption will accelerate onchain activity, including in decentralized finance (DeFi).
The survey found that only 24% of institutional investors currently use DeFi platforms, but that figure is expected to grow to nearly 75% in the next two years.
“Institutions are attracted to DeFi for myriad reasons, citing derivatives, staking, and lending as the use cases they are most interested in, followed closely by access to altcoins, crossborder settlements, and yield farming,” the report said.
Magazine: Bitcoin dominance will fall in 2025: Benjamin Cowen, X Hall of Flame
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