Duncan Moir of 21Shares writes that investors’ views about crypto are changing – and fast. Pension funds are buying into bitcoin through exchange-traded products. As are charities and endowments. Investment bank bosses who once poured scorn on digital assets are quietly changing their position.
And this was all happening before Donald Trump, and his pro-crypto administration, moved back into the White House.
Taking a step back, this steady shift in interest mirrors the rise of hedge funds. Within a relatively short space of time, hedge funds moved from being viewed as opaque, high-risk investments to essential portfolio components. Even for the most conservative institutions.
Right now, the crypto movement is where the hedge fund industry was in about 2006 – on the cusp of a major institutional tipping point.
The story goes like this: in the 1960s and 70s, hedge funds were a niche pursuit, operating behind closed doors in New York and London. Their reputation for secrecy and complexity kept institutions at bay. It wasn’t until pension funds and endowments, such as Yale’s endowment under David Swensen, began allocating capital in the early 2000s that hedge funds gained wider acceptance. The turning point came when the California Public Employees’ Retirement System (CalPERS) invested billions, legitimising hedge funds as a serious investment category. Today, they are an established part of diversified portfolios.
Crypto is undergoing a similar evolution. Bitcoin is carving a niche as “digital gold”, valued for its finite supply and use as an inflation hedge. And the technological innovation offered by multiple other blockchains is starting to come to the attention of tech investors.
Imagine a tech start-up that could walk into a pitch meeting with prospective investors that could say it had built a technology that was being used by Visa and BBVA to develop a new payments system. It’s fair to assume the prospective investors would pay attention. Yet that technology is real, and it’s called Ethereum.
Examples like this are everywhere. Blockchain technology is already in use across areas as diverse as logistics, stock monitoring, emissions tracking and payments. Beyond Ethereum, Solana, XRPL, and numerous other blockchains are seeing widespread adoption. Their native cryptocurrencies (e.g. ETH, SOL and XRP respectively) give investors exposure to their success.
Institutional investors are no longer standing on the sidelines, with ETF providers offering a regulated gateway into the market. Regulators are shifting their stance in response, moving from outright scepticism to establishing clearer frameworks. The EU’s Markets in Crypto-Assets (MiCA) regulation and the UK’s evolving crypto policy are examples of a global shift toward responsible integration.
Major financial institutions are taking notice. JP Morgan and Goldman Sachs have begun offering crypto-related services to clients. Hedge fund titans like Paul Tudor Jones and Stanley Druckenmiller have allocated to bitcoin. Several US state pension funds have also allocated to bitcoin. For example, the Michigan State Pension Fund, which has a total value of over USD200 billion, has allocated USD9 million to a bitcoin exchange-traded fund. Several other state pension schemes have followed suit, and UK and Australian pension fund managers have started to make small allocations in recent months as well. Even central banks are studying the implications of digital assets, with the Bank of England and European Central Bank assessing the role of cryptocurrencies in modern finance.
There is of course still some scepticism. But this is nothing new—hedge funds faced the same resistance. They were once seen as the Wild West of finance. Over time, performance data won over institutions. The same pattern is emerging with crypto. Institutional investors are not embracing it out of ideology but because it offers diversification, liquidity, and risk-adjusted returns in a changing financial landscape.
The question is no longer whether crypto will be institutionalised, but how quickly. The early movers are already securing their foothold. Those who embraced hedge funds early saw outsized gains. Those who waited were left scrambling. The same will be true for crypto. The market is maturing, and the window for securing early-mover advantage is closing fast.
That’s part of the reason why I have taken the leap from conventional asset management into the crypto realm. This is not a passing fad. It’s a slow but steady revolution.
