Institutional Strategies Drive Crypto Bull Run Amid Regulatory Clarity

Xu Han, a partner at HashKey Capital, has provided insights into the strategies of sophisticated investors during the current bull run, which is characterized by institutional demand rather than the initial coin offerings (ICOs) and non-fungible tokens (NFTs) that drove past cycles. According to Xu, institutional allocators are employing complex strategies such as ETF basis trading, staking arbitrage, and wrapped BTC deployments across decentralized finance (DeFi) platforms. This shift reflects a growing sophistication in investor behavior, which is catching up to the complexity of the asset class itself.

Xu also highlighted the increasing importance of regulatory clarity for institutional investors, who prefer assets and products that fit into compliant custody, ETF wrappers, or licensed platforms. Additionally, sophisticated investors are relying more on on-chain metrics, monitoring data such as capital flows, protocol revenue, and wallet cohort behavior, rather than just sentiment.

During the interview, Xu argued that the crypto cycle is still in a growth phase, with the dollar expected to depreciate against major fiat currencies by up to 10% in the coming 12 to 24 months. He also noted that the anticipated policy shift by the Federal Reserve, including rate cuts and the wind-down of quantitative tightening, is expected to inject fresh liquidity into markets, which has historically benefited crypto. On-chain data also indicates lower selling pressure from longer-term holders and repositioning by short-term traders, suggesting that the speculative peak of the bull market has not yet been reached.

HashKey Capital believes there is a plausible trajectory where Bitcoin could reach the $1 million mark by 2035. This projection is based on the institutional embrace of Bitcoin's role as a digital store of value and the acceleration of portfolio integration across traditional finance. The firm's central thesis projects that Bitcoin's market capitalization could eventually match that of investable gold over the coming decade.

Looking at the current bull market, Xu acknowledged that it has been a "soft" second quarter for altcoins, but select names could be gearing up for a strong performance in the third quarter. Ethereum's fundamentals remain solid, with the majority of tokenized assets and smart contract activity still hosted on its platform. Solana has also demonstrated impressive traction, achieving mainstream integrations and capturing DeFi activity. Liquid staking and restaking protocols like Lido and EigenLayer offer a unique yield layer that institutional allocators increasingly recognize, providing additional upside in risk-on environments.