Increased Cryptocurrency Investment from Institutional Investors

The March 18 report from Coinbase and EY-Parthenon shows the growing trend of institutional investors towards cryptocurrencies, with 83% expected to increase their cryptocurrency investment by 2025. Currently, nearly three-quarters of these institutions already own cryptocurrencies other than Bitcoin (BTC) and Ether (ETH), and a "significant majority" plan to increase their cryptocurrency investment to at least 5% of their portfolio.

Drivers of Increased Cryptocurrency Investment

According to the report, investment firms believe that "cryptocurrencies represent the best risk-adjusted return opportunity over the next three years." The research was conducted based on interviews with more than 350 institutional investors in January this year.

Altcoins and Institutional Cryptocurrency Interest

XRP (XRP) and Solana (SOL) are seen as the most popular altcoins in institutional investment portfolios, according to the survey results. Altcoin assets may increase further if US regulations approve the listing of exchange-traded funds (ETFs) this year. LTC, SOL, and XRP are predicted to have the highest likelihood of receiving approval in the near term.

Stablecoins and DeFi on the Institutional Radar

Stablecoins continue to see interest from institutions, with 84% of survey participants already holding or considering investing in stablecoins. The adoption of stablecoins is expected to increase on-chain trading activity, particularly in DeFi (Decentralized Finance) activities.

The Growth of DeFi

Currently, only 24% of institutional investors use DeFi platforms. However, this figure is expected to rise to nearly 75% within the next two years. Institutions are attracted to DeFi due to its diversification benefits, including derivatives, Staking, and lending, along with access to Altcoins, cross-border payments, and yield farming.