Author: Centreless In 2025, the cryptocurrency market reached a structural turning point: institutional investors became the dominant force, while retail investors cooled off significantly. Aishwary Gupta, Global Head of Payments and Real Assets at Polygon Labs, pointed out in a recent interview that institutional funds now account for about 95% of the total inflow into cryptocurrencies, while retail investors account for only 5%-6%, indicating a significant shift in market dominance. He explained that the shift by institutions is not driven by emotion, but rather a natural result of the maturing infrastructure. Asset management giants including BlackRock, Apollo, and Hamilton Lane are allocating 1%-2% of their portfolios to digital assets, accelerating their deployment through ETFs and on-chain tokenized products. Gupta cited examples such as Polygon's collaborations, JPMorgan Chase's testing of DeFi transactions under the supervision of the Monetary Authority of Singapore, Ondo's tokenized government bond project, and AMINA Bank's regulated staking, all demonstrating that public blockchains can already meet the compliance and auditing requirements of traditional finance. The two main drivers for institutional entry are the need for returns and operational efficiency. The first phase mainly focused on obtaining stable returns through tokenized government bonds and bank-grade collateral; the second phase is driven by the efficiency improvements brought by blockchain, such as faster settlement speeds, shared liquidity, and programmable assets, which has prompted large financial institutions to experiment with on-chain fund structures and settlement models. In contrast, the exit of retail investors is mainly due to losses and loss of trust caused by the previous Meme coin cycle. However, Gupta emphasizes that this is not a permanent loss, and retail investors will gradually return as more regulated and risk-transparent products emerge. Regarding concerns that institutional participation might undermine the decentralized nature of cryptocurrencies, Gupta argues that as long as the infrastructure remains open, institutional involvement will not only fail to centralize the blockchain but will actually enhance its legitimacy. He points out that the future financial network will be a fusion system where multiple asset classes, such as DeFi, NFTs, government bonds, and ETFs, coexist on the same public blockchain. Regarding whether institutional dominance would stifle innovation, he acknowledged that some experiments would be limited in a more compliance-oriented environment, but in the long run, this would help the industry build a more robust and scalable innovation path, rather than relying on high-speed trial and error through "breaking the rules." Looking ahead, he stated that institutional liquidity will continue to improve market stability, volatility will decrease as speculative activity diminishes, and RWA tokenization and institutional-grade staking networks will develop rapidly. Interoperability will also be crucial, as institutions will need infrastructure that enables seamless asset transfers across chains and aggregation layers. Gupta emphasized that institutional entry is not a "takeover" of crypto by traditional finance, but a process of jointly building new financial infrastructure. Cryptocurrencies are gradually evolving from speculative assets into the core underlying technology of the global financial system.Author: Centreless In 2025, the cryptocurrency market reached a structural turning point: institutional investors became the dominant force, while retail investors cooled off significantly. Aishwary Gupta, Global Head of Payments and Real Assets at Polygon Labs, pointed out in a recent interview that institutional funds now account for about 95% of the total inflow into cryptocurrencies, while retail investors account for only 5%-6%, indicating a significant shift in market dominance. He explained that the shift by institutions is not driven by emotion, but rather a natural result of the maturing infrastructure. Asset management giants including BlackRock, Apollo, and Hamilton Lane are allocating 1%-2% of their portfolios to digital assets, accelerating their deployment through ETFs and on-chain tokenized products. Gupta cited examples such as Polygon's collaborations, JPMorgan Chase's testing of DeFi transactions under the supervision of the Monetary Authority of Singapore, Ondo's tokenized government bond project, and AMINA Bank's regulated staking, all demonstrating that public blockchains can already meet the compliance and auditing requirements of traditional finance. The two main drivers for institutional entry are the need for returns and operational efficiency. The first phase mainly focused on obtaining stable returns through tokenized government bonds and bank-grade collateral; the second phase is driven by the efficiency improvements brought by blockchain, such as faster settlement speeds, shared liquidity, and programmable assets, which has prompted large financial institutions to experiment with on-chain fund structures and settlement models. In contrast, the exit of retail investors is mainly due to losses and loss of trust caused by the previous Meme coin cycle. However, Gupta emphasizes that this is not a permanent loss, and retail investors will gradually return as more regulated and risk-transparent products emerge. Regarding concerns that institutional participation might undermine the decentralized nature of cryptocurrencies, Gupta argues that as long as the infrastructure remains open, institutional involvement will not only fail to centralize the blockchain but will actually enhance its legitimacy. He points out that the future financial network will be a fusion system where multiple asset classes, such as DeFi, NFTs, government bonds, and ETFs, coexist on the same public blockchain. Regarding whether institutional dominance would stifle innovation, he acknowledged that some experiments would be limited in a more compliance-oriented environment, but in the long run, this would help the industry build a more robust and scalable innovation path, rather than relying on high-speed trial and error through "breaking the rules." Looking ahead, he stated that institutional liquidity will continue to improve market stability, volatility will decrease as speculative activity diminishes, and RWA tokenization and institutional-grade staking networks will develop rapidly. Interoperability will also be crucial, as institutions will need infrastructure that enables seamless asset transfers across chains and aggregation layers. Gupta emphasized that institutional entry is not a "takeover" of crypto by traditional finance, but a process of jointly building new financial infrastructure. Cryptocurrencies are gradually evolving from speculative assets into the core underlying technology of the global financial system.