Behind Bitcoin's $120K Benchmark: Retail Still Runs The Show, But Institutions Are Starting To Jump In

As Bitcoin hit a record high this week, attention has turned to the role institutional investors have played in the rally. Some analysts say the current surge is still driven by retail investors, while the role of institutional investors is just "getting started."

Earlier this week, the world’s largest cryptocurrency soared above $120,000 to a record high, boosted by expectations of crypto-friendly policies from Washington. However, analysts say that while discussions around digital assets have increased, there is still room for growth in institutional demand as pension funds and other long-term buyers add Bitcoin to their portfolios.

On Thursday, a closely watched U.S. stablecoin bill easily passed the House of Representatives, and President Trump is expected to sign it into law on Friday. At the same time, the House also passed a bill (the CLARITY Act) to establish a regulatory framework for cryptocurrencies, which will now move to the Senate for consideration. A core provision of the bill is to weaken the U.S. SEC’s regulatory authority over cryptocurrencies and transfer more control to the Commodity Futures Trading Commission (CFTC).

In addition, some major U.S. banks, including Bank of America and Citigroup, are working to launch stablecoins.

Adrian Fritz, research director at digital asset investment firm 21Shares, said institutional holdings are still in the early stages, but retail investors still dominate the crypto market.

Fritz estimates that less than 5% of all spot Bitcoin ETF assets are held by long-term investors such as pension funds and endowments, with another 10% to 15% held by hedge funds or wealth management firms.

But he said hedge funds or wealth management firms typically buy these funds on behalf of high-net-worth retail clients, while the majority of ETF holdings remain retail.

According to estimates from research firm Vanda Research, there is a correlation between the surge in retail purchases of crypto ETFs and crypto-related stocks and rising prices. Data show that in late 2024, after Trump won the U.S. election (he vowed to be the "crypto president"), cryptocurrency prices soared, and retail buyers piled in. The recent rally has followed a similar pattern.

Simon Forster, co-global head of digital assets at trading platform operator and data provider TP ICAP, predicts that by 2026, the number of institutions active in the crypto space will grow, including pensions and other buy-and-hold companies.

On the other hand, publicly traded companies like Strategy and GameStop are playing an increasingly significant role in driving the rally. Originally focused on software and video game retail, respectively, they now emphasize holding Bitcoin positions on their balance sheets and making money through Bitcoin positions rather than cash, gold, or U.S. Treasuries.

Juan Leon, research analyst at asset management firm Bitwise Asset Management, said these companies’ Bitcoin purchases indicate they are a larger source of recent Bitcoin demand, while pensions, endowments, and hedge funds are major players in the stock and bond markets.

Simon Peters, crypto analyst at investment platform eToro, said that since July last year, the Bitcoin holdings of global publicly traded companies have increased by 120%, now holding more than 859,000 Bitcoins, accounting for 4% of the planned total supply of 21 million Bitcoins.