Polygon executives: Institutions will enter the crypto market in a big way in 2025, and retail investors will exit only in stages

In 2025, the cryptocurrency market will usher in a structural turning point: institutional investors have become the absolute main force, while retail investors have cooled 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 overall inflow of cryptocurrencies, and the proportion of retail investors is only 5%-6%, and market dominance has changed significantly.

He explained that the institutional pivot is not driven by emotions, but is a natural result of the maturation of infrastructure. Asset management giants, including BlackRock, Apollo, and Hamilton Lane, are allocating 1%-2% of their portfolios to digital assets, accelerating their layout through ETFs and on-chain tokenization products. Gupta cited Polygon’s cooperation cases as examples, including JPMorgan Chase’s testing of DeFi transactions under the supervision of the Monetary Authority of Singapore, Ondo’s tokenized treasury bond project, and AMINA Bank’s regulated staking, all of which show that public chains have been able to meet the compliance and auditing needs of traditional finance.

The two main drivers of institutional entry are revenue demand and operational efficiency. The first stage mainly focuses on obtaining stable returns through tokenized treasury bonds and bank-level pledges; The second phase is driven by the efficiency gains 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 withdrawal of retail investors mainly stemmed from losses and loss of trust caused by previous meme coin cycles, but Gupta emphasized that this is not a permanent loss and that retail investors will gradually return as more regulated and risk-transparent products emerge.

In response to concerns that institutional entry weakens the concept of cryptocurrency decentralization, Gupta believes that as long as the infrastructure remains open, institutional participation will not only not centralize the blockchain but will enhance its legitimacy. He pointed out that the future financial network will be a convergence system where multiple types of assets such as DeFi, NFTs, treasury bonds, and ETFs coexist on the same public chain.

As for whether institutional leadership will stifle innovation, he admitted that some experiments will be limited in a more compliance-focused environment, but in the long run, it will help the industry build a more robust and scalable innovation path, rather than relying on “rule-breaking” high-speed trial and error.

Looking ahead, he said that institutional liquidity will continue to improve market stability, volatility will decrease after speculative activity decreases, and RWA tokenization and institutional-level staking networks will develop rapidly. Interoperability will also be key, with institutions needing infrastructure that can seamlessly transfer assets across chains and rollup layers.

Gupta emphasized that institutional entry is not a “takeover” of crypto by traditional finance, but a process of jointly building a new financial infrastructure, and cryptocurrencies are gradually evolving from speculative assets to the core underlying technology of the global financial system.