Diversification Replaces Speculation as Core Investment Thesis for Institutional Crypto Investors

Sygnum, a global digital asset banking group, has revealed the results of its Future Finance 2025  global institutional investor report. The late-Q3 survey analyses the core interests, market sentiment and behaviour of 1000+  institutional and professional investors active in the crypto market across 43 countries. The 38-page report has six major  themes; asset allocation, investment strategies, products and services, investment barriers, market outlook, plus a new  spotlight on High Net Worth Individuals (HNWIs). Below is a summary of the report’s key numbers and insights drawn from  the survey. 

For the first time, we see respondents rating portfolio diversification (57%) asthe key reason to invest in digital assets, overtaking  short-term return potential (53%) and perceived value as a safe-haven investment and macro hedge (45%). Several factors are  driving this trend shift. Crypto asset’s multi-dimensional nature and idiosyncratic properties are enabling new diversified models  within multi-asset portfolios. An expanding digital asset universe, from yield bearing DeFi to tokenized Real World Assets (RWAs), 

is also enhancing diversification potential, especially when supported by institutional-grade infrastructure and on-ramps. This  year’s report clearly shows that institutional crypto investors are now thinking less “crypto as defence” and more about  “participation” in the structural evolution of global finance. 

Key Numbers: 

OUTLOOK → 61% plan to increase their digital asset allocations and 55% lean bullish in the short-term – however this is dependent on the Q4 arrival of a number of market catalysts and improved market conditions 

STRATEGY → 76% favour direct token investments and 55% support ETPs/ETFs 

BITCOIN → Over 80% believe Bitcoin is a viable treasury reserve, and 70% report that holding cash instead of Bitcoin has a high opportunity cost over 5 years 

TOKENIZED RWAs → 26% are interested in this asset class due to greater product availability – up 20% from 2024 STABLECOINS → 50% allocation due to improved regulatory conditions – this is likely to grow further 

ETFs → Over 80% are interested in crypto ETFs beyond Bitcoin and Ethereum, with 70% willing to start allocating, or  to allocate more, if they offered staking 

HNWIs → 91% agree that crypto is important in long-term wealth preservation

Lucas Schweiger, Lead Crypto Asset Ecosystem Research and report author, says “Digital assets and traditional finance are now  intertwined more than ever through legislation, regulated derivatives, corporate demand and exciting new tokenisation and  stablecoin trends. The story of 2025 is one of measured risk, pending regulatory decisions and powerful demand catalysts against  a backdrop of fiscal and geopolitical pressures. But investors are now better informed. Discipline has tempered exuberance, but  not conviction, in the market’s long-term growth trajectory.” 

Additional Report Insights 

Top investment strategies are now actively managed and passive market exposure  

Single token exposure is no longer the dominant strategy, with institutional respondents now looking towards actively managed  mandates that can adapt to changing market conditions and spread risk more evenly. The rise in the popularity of discretionary  mandates is explained by a market outlook that is now highly event and policy driven. 

Increased ETF flows expected if staking is enabled  

More than 70 percent of respondents said they would start to allocate, or consider increasing their allocations, if staking were  enabled on the more than 90 ETF applications pending SEC approval. Interest was strongest in the Solana and multi-asset ETPs,  the latter seen by many investors as the next-stage of evolution for these products. While the SEC has delayed some filings due  to the US Government shutdown, including BlackRock’s ETH staking amendment, earlier unexpected approvals may act as  market catalysts. 

Direct token investments and ETFs dominate product interest 

According to respondents, direct token investments continue to dominate institutional allocations, likely due to the performance  of major tokens and their ability to be flexibly deployed into staking, lending and other yield-generating strategies. Demand for  Ether has risen in parallel with its ETF and treasury demand growth, while interest in actively managed and index-linked  certificates shows that investors are looking for more ways to adjust their exposure as conditions change. 

Regulatory uncertainty and security and custody remain the main concerns 

Regulatory uncertainty has overtaken asset volatility as the leading barrier to entry, which may indicate that investors are  increasingly at ease with market conditions and cycles, and are instead waiting for legislation and frameworks to be passed. This  trend is more evident in APAC than in Europe. When asked about the greatest barriers to investing in digital assets, respondents  also cited concerns around security and custody. These are reminders that reliable infrastructure will always be a prerequisite  for traditional institutional investors to invest with confidence and peace of mind. 

Q4 allocations delayed due to market uncertainty 

In late Q3, strong Q4 allocation plans were based on anticipated catalysts, including more ETFs and market structure bills. These  have not yet arrived, and Q4 to date has been marked by adverse market conditions, including the October liquidations. Some  plans may have changed. Mid-Q4 sentiment may also be influenced by anticipated cooling momentum after the impact of the  market catalysts, not yet in place, and uncertainty about 2026. 

Please note: Sygnum’s Future Finance Report 2025 reflects the views of the surveyed participants and should not be considered  a universal representation of the whole market, nor interpreted as investment advice or expectations of performance.