The traditional four-year crypto cycle that investors have come to rely on appears to be a thing of the past. Institutional adoption of cryptocurrencies has been on the rise, with the launch of exchange-traded funds (ETFs), tokenization of real-world assets, and the development of stablecoin infrastructure reshaping the market landscape.
In a recent report by analyst Ignas on Sept. 24, it was noted that the launch of Bitcoin (BTC) and Ethereum (ETH) ETFs in 2024 marked a significant turning point. Crypto ETFs have seen $34 billion in inflows since April, making them the leading category in terms of institutional investment.
These products have attracted the attention of pension funds, financial advisors, and banks, who have started adding cryptocurrencies to their portfolios alongside traditional assets like gold and Nasdaq holdings. Currently, Bitcoin ETFs hold over $150 billion in assets under management, representing 6% of the total supply, while Ethereum ETFs control 5.6% of the ETH supply.
The approval of generic listing standards for commodity exchange-traded products (ETPs) in September has further accelerated this shift towards institutional adoption. This paves the way for faster approvals of additional crypto assets, with new fund filings for tokens like Solana and XRP expected to follow suit.
This transition has been dubbed “The Great Crypto Rotation,” as ownership shifts from retail speculators to long-term institutional investors. While retail investors typically follow a four-year cycle of buying and selling, institutions are accumulating assets for the long term. This has reset cost bases higher and established new price floors, with ETFs now serving as the primary buyers for Bitcoin and Ethereum.
In addition to ETFs, stablecoins and digital asset treasury (DAT) companies are reshaping the crypto landscape. Stablecoins have evolved from being used solely for trading to encompassing a range of functions such as payments, lending, and treasury operations. The approval of stablecoins as derivatives collateral by the CFTC has further boosted institutional demand for these assets.
Payment-focused blockchains like Tempo by Stripe and Plasma by Tether are also driving the adoption of stablecoins in real-world transactions, reducing their direct correlation to the price movements of Bitcoin and Ethereum.
On the other hand, DAT companies are providing access to equity markets for tokens that do not have ETF approval. This allows projects with genuine revenue and user bases to tap into larger equity markets, providing liquidity for venture capital positions and bringing institutional capital into altcoin markets.
Overall, these developments suggest that crypto is transitioning from a speculative market to a permanent financial infrastructure. While broad market rallies may become less common, selective token performance based on sustainable business models is likely to drive institutional capital flows in the future.