Institutional investors are increasingly optimistic about cryptocurrency, with 83% planning to increase their crypto allocations in 2025, according to a March 18 report by Coinbase and EY-Parthenon.
Nearly three-quarters of surveyed firms already hold cryptocurrencies beyond Bitcoin (BTC) and Ether (ETH), and a “significant majority” intend to boost their crypto allocations to 5% or more of their portfolios, as stated in the report.
They are driven by the belief that “cryptocurrencies represent the best opportunity to generate attractive risk-adjusted returns over the next three years.”
Coinbase, the largest U.S. crypto exchange, and EY-Parthenon, a consultancy, compiled their findings from interviews with over 350 institutional investors in January. Among institutional altcoin holdings, XRP and Solana (SOL) are the most popular, according to the survey.
Coinbase and EY-Parthenon surveyed more than 350 financial institutions on crypto. Source: Coinbase
Altcoin ETFs on the Horizon
Altcoin investments could see further growth if U.S. regulators approve proposed exchange-traded funds (ETFs) this year.
Asset managers are waiting for the U.S. Securities and Exchange Commission to approve over a dozen altcoin ETF proposals. According to Bloomberg Intelligence, Litecoin (LTC), SOL, and XRP are the most likely candidates for near-term approval.
In a notable development, on March 17, the Chicago Mercantile Exchange (CME) Group, the largest U.S. derivatives exchange, launched futures contracts for SOL, signaling increased institutional adoption of the altcoin.
Stablecoin & DeFi Adoption Expanding
Institutional interest in stablecoins is growing, with 84% of respondents either holding stablecoins or considering their use.
The report states that 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 predicted that stablecoin adoption would fuel increased onchain activity, including in decentralized finance (DeFi).
Although only 24% of institutional investors currently use DeFi platforms, this figure is expected to rise to nearly 75% within 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.
Edit by William.
Source: Cointelegraph
