Institutional Investors Are Increasingly Investing in Cryptocurrency — However, a Decline in 2026 May Be Ahead: Sygnum

Institutional investors are significantly increasing their engagement with digital assets at an unprecedented rate this year, yet projections for 2026 are considerably less favorable, as indicated by recent research from Swiss crypto bank Sygnum.

In its Future Finance 2025 report published this week, Sygnum discovered that 61% of institutional participants intend to enhance their cryptocurrency investments by the end of the year, with 38% planning to increase their exposure in the fourth quarter alone.

The results illustrate a rising confidence in digital assets as a sustainable component of investment portfolios, despite a significant market correction in October that wiped out nearly $20 billion in market capitalization.

Has Institutional Confidence Reached Its Peak in Crypto, or Is This Merely the Start?

Sygnum noted that this shift signifies a move from speculative trading to strategic diversification. “Institutions are focusing less on crypto as a defensive measure and more on engaging in the structural transformation of global finance,” stated report author Lucas Schweiger.

The survey included over 1,000 professional and high-net-worth investors from 43 nations.

While the short-term outlook remains robust, Sygnum’s findings imply that the current rally may decelerate in 2026 as liquidity diminishes and macroeconomic support wanes.

Source: Sygnum

“The narrative for 2025 revolves around calculated risk, pending regulatory decisions, and significant demand drivers,” Schweiger wrote. “Discipline has moderated enthusiasm, but not belief, in the market’s long-term growth path.”

Approximately 55% of institutions remain optimistic in the short term, anticipating further gains fueled by ETF approvals and clearer policies.

However, investor sentiment shifts to neutral to bearish beyond the end of the year, with slower growth anticipated by mid-2026 as interest rate reductions stabilize and regulatory advancements stall.

A key factor contributing to this change is the increasing concentration of Bitcoin holdings among large entities and regulated funds.

CryptoNews analysis of CryptoQuant and Dune Data indicates that institutional and large-scale holders have consistently absorbed more supply since the approval of spot ETFs in January 2024.

Source: CryptoNews

Retail investors, who previously held 17% of Bitcoin’s circulating supply in 2020, have decreased their holdings by approximately 20% over the past year, while ETF-related and institutional wallets now command over 7 million BTC.

This trend reflects a broader structural shift as large holders transfer assets into regulated ETFs for tax and compliance advantages, indicating deeper integration into traditional finance.

Sygnum’s report also revealed that institutional interest in tokenized real-world assets such as bonds and funds increased from 6% to 26% year-over-year.

The bank noted that tokenization is becoming a pathway for conservative investors seeking regulated on-chain exposure.

Coinbase, Sygnum Reports Indicate Institutions Maintaining Steady Holdings Despite Policy Delays

Interest in crypto ETFs beyond Bitcoin and Ether is rapidly growing. Over 80% of respondents expressed a desire for broader ETF access, and 70% indicated they would boost allocations if staking rewards were available.

Sygnum suggested that ETFs with staking capabilities could become a significant catalyst for institutional inflows once regulatory conditions permit.

Nevertheless, delays in crucial U.S. policy developments, including the Market Structure bill and the approval of altcoin ETFs, have created uncertainty.

The ongoing U.S. government shutdown, now in its 41st day, has postponed at least 16 pending crypto ETF applications, dampening short-term momentum.

Despite these challenges, institutional confidence remains strong. Coinbase’s latest Navigating Uncertainty survey found that 67% of large investors are optimistic about Bitcoin as they approach 2026, even as some recognize that the market is entering the later stages of its bull cycle.

@Coinbase found that 67% of institutional investors are bullish on Bitcoin, even as some believe market is nearing the end of its bull run.#Crypto #Bitcoinhttps://t.co/FdLD8DMMco

— Cryptonews.com (@cryptonews) October 20, 2025

Coinbase researchers highlighted that supportive macro factors, including anticipated Federal Reserve rate cuts and fiscal stimulus in China, could prolong market strength into 2025.

However, analysts caution that as liquidity tightens and long-term holders realize profits, market growth may decelerate by mid-2026.

Sygnum’s report characterized 2025 as a year of “significant demand drivers” tempered by regulatory caution.

The bank anticipates that institutional involvement will deepen through ETF adoption, tokenized assets, and diversification but noted that the next phase of the cycle will likely challenge investor discipline rather than exuberance.

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