Institutions Embrace Crypto Diversification, Bullish on 2025 but Bearish Beyond

According to a new report by Swiss crypto bank Sygnum, institutional investors are significantly increasing their exposure to digital assets in 2025. The findings show that 61% of institutional respondents plan to expand their cryptocurrency investments by the end of this year, with 38% adding exposure in the fourth quarter alone.

This shift marks a transition from speculative trading to strategic diversification, as institutions view crypto as a long-term portfolio component rather than just a defensive asset. "Institutions are thinking less about crypto as defense and more about participation in the structural evolution of global finance," said report author Lucas Schweiger.

However, the long-term outlook is less optimistic. Sygnum's data suggests the crypto rally may cool in 2026 as liquidity slows and macroeconomic tailwinds fade. Investor sentiment turns neutral to bearish beyond the end of this year, with slower growth expected by mid-2026 as regulatory progress stalls.

A major factor behind this shift is the growing concentration of Bitcoin holdings among large entities and regulated funds. Institutional and entity-scale holders have steadily absorbed more supply since spot ETF approvals in January 2024, while retail investors have reduced their Bitcoin holdings by roughly 20% over the past year.