When the Paradigm Shifts: How Institutions Are Redefining the Crypto Market in 2025

2025 marked a seemingly dark year for the cryptocurrency market. BTC recorded an annual return of -5.4% (currently at $91.22K), ETH -12% (now at $3.11K), while major altcoins lost between 35% and 60%. However, behind these negative numbers lies an unprecedented structural transformation in the crypto market.

The Surprising Contrast: Low Prices, Huge Capital

Looking at the broader landscape, we notice something paradoxical. While prices were falling, Bitcoin ETFs experienced a net inflow of $25 billion in 2025, with total AUM reaching $114–120 billion. At the same time, BTC hit a new all-time high of $126,080.

This phenomenon reveals a fundamental truth: the paradigm of the crypto market is no longer centered on short-term fluctuations but is governed by a new strategic allocation logic.

Traditional Assets vs. Crypto: A Different Story

In 2025, traditional assets showed solid performance: silver +130%, gold +66%, copper +34%, Nasdaq +20.7%, S&P 500 +16.2%. Yet, the crypto market was not simply “underperforming” — it was undergoing a phase of market reallocation.

From Retail to Institutional Governance: The New Paradigm

The Change of Guard in Numbers

The paradigm that dominated the crypto market has been completely reversed. Institutions now hold 24% of total positions, while retail has sold a net 66% of their holdings. This represents the most significant turnover in crypto market history.

The approval of spot Bitcoin ETFs in January 2024 was the catalyst. BlackRock IBIT reached $50 billion in AUM in just 228 days, becoming the fastest-growing ETF ever recorded. The fund now holds 780,000–800,000 BTC, surpassing the 671,268 BTC of MicroStrategy.

Together, Grayscale, BlackRock, and Fidelity control 89% of total BTC ETF assets. 86% of institutional investors filing 13F forms own or plan to allocate digital assets.

Traditional Banks Enter the Game

Major financial intermediaries have begun massively integrating Bitcoin ETF products into their portfolios:

• Wells Fargo: $491 millions in Bitcoin ETFs
• Morgan Stanley: $724 millions
• JPMorgan: $346 millions

Sovereign funds from Abu Dhabi (ADIC), Mubadala, and even Harvard’s endowment (which holds $116 millions in IBIT) represent the new class of crypto investors.

Why Are Institutions Still Buying “on the Rise”?

The answer lies in the paradigm shift in investment objectives. While retail seeks quick gains, institutions look at economic cycles and strategic timeframes.

The Selling Pressure Absorbed by the Market

Between March 2024 and November 2025, long-term holders (LTH) sold approximately 1.4 million BTC worth $121.17 billion. This was the largest liquidation wave ever seen in the crypto market.

Yet, the price did not collapse. Why? Institutions and listed companies systematically absorbed all this selling pressure. One and a half billion BTC remaining dormant for over 2 years experienced a decrease of 1.6 million (around $140 billion) since January 2024. The market’s capacity to absorb this supply increased proportionally.

Meanwhile, what were retail investors doing? Google searches for “bitcoin” hit 11-month lows. Micro-transaction volume (from $0 $1) plummeted by 66.38%, while transactions over $10 million increased by 59.26%. River estimates that retail investors liquidated a net 247,000 BTC (around $23 billion) in 2025.

The New Cycle: Not the “Top,” but Institutional Accumulation

How the Rules of the Game Are Changing

The traditional crypto cycle paradigm followed a predictable pattern: retail euphoria → explosive price → crash → restart. The new paradigm follows a completely different logic:

Stable institutional allocation → Reduced volatility → Gradual rise of the base price → Sustained structural growth

This explains why the price lateralizes at highs for an entire year (a phenomenon never before observed), while capital flows remain positive. The correlation between BTC and the S&P 500 rose from 0.29 in 2024 to 0.5 in 2025, indicating that the crypto market is integrating into traditional assets.

Unprecedented Political Support

The Trump administration of 2025 created an unparalleled favorable regulatory environment:

• Crypto Executive Order (signed on January 23)
• Strategic Bitcoin Reserve (~200,000 BTC)
• GENIUS Act for stablecoins
• SEC Chair Change (Atkins in office)

Under discussion: the Market Structure Act (77% probability of approval by 2027) and the purchase of short-term government bonds via stablecoins, which could grow tenfold in the next three years.

2026: Midterm Elections and Structural Volatility

The midterm elections of November 2026 will be a turning point. 435 House seats and 33 Senate seats will be up for election. In 2024, 274 pro-crypto candidates were elected, but banking lobbying groups plan to invest over $100 million to counter the influence of the crypto sector.

64% of crypto investors consider candidates’ positions on crypto “very important” in voting decisions.

Investment Timeline for 2026

History suggests a predictable pattern for election years:

• First half of 2026: “Political honeymoon” + continued institutional allocation = optimism phase and regulatory implementation
• Second half of 2026: Pre-election political uncertainty = increased volatility and possible retracement

Price Targets: The Institutional Perspective

As the paradigm shifts, institutions set ambitious targets based on fundamental analysis:

• VanEck: $180,000
• Standard Chartered: $175,000–$250,000
• Tom Lee: $150,000
• Grayscale: new all-time high in the first half of 2026

These targets are not blind speculation but are based on:

• Continuous and stable ETF inflows
• Increasing Bitcoin reserves of publicly listed companies (134 global companies hold 1.686 million BTC)
• An unprecedented political window in the USA
• Institutional allocation still in early stages

Investment Logic: Short, Medium, and Long Term

Summarizing the market analysis:

Short-term (3–6 months): Fluctuation between $87,000–$95,000, with institutions continuing to quietly accumulate

Medium-term (first half 2026): Dual support engine of political backing + sustained institutional allocation; target $120,000–$150,000

Long-term (second half 2026): Increased volatility; focus on midterm election results and political support continuity

Conclusion: Not the Peak of a Cycle, but the Beginning of a New One

2025 represents the most significant paradigm turnover in crypto market history. Every major cycle has brought increasingly sophisticated participants and larger capital:

• 2013: Retail dominance, max $1,100
• 2017: ICO mania, max $20,000
• 2021: DeFi + NFT, max $69,000
• 2025: Institutional entry, new all-time high coming

The “worst performance” of 2025 is actually a phase of structural transition from the old retail speculation paradigm to the new institutional allocation paradigm. Price is the cost of this transition, but the direction is crystal clear.

While BlackRock, Fidelity, and sovereign funds strategically accumulate, retail still wonders “Will it go lower?”. This is the perspective difference between the old and the new paradigm.

The crypto market of 2026 will be defined by regulatory clarity, political continuity, and infrastructure completeness. For long-term operators, the task is not to predict short-term movements but to identify and ride the structural trends. The paradigm has changed. Those who adopt the new logic have the right strategy.