Introduction
The variety and quantity of crypto assets are vast, and investors often feel overwhelmed when making choices. At this point, the investment strategies of institutional investors naturally become a benchmark. Many retail investors prefer to follow institutional investments, choosing crypto assets based on institutional behavior. So, which crypto assets are more likely to attract institutional favor, and what reference value do institutional investment strategies hold for beginners?
What Is Institutional Investment? The Difference Between Retail and Institutional Investors.
Whether in traditional investment markets or crypto assets, there are two types of participants: retail investors and institutional investors.
Institutional investors are typically large-scale legal entities, such as corporations, financial institutions, governments, or securities agencies. They engage in large-volume trading and significantly influence market trends, often regarded as experienced and sophisticated investors.
For example, the current Bitcoin bull run is called an "institutional bull market," where traditional financial institutions flooded into the cryptocurrency market, driving up prices while triggering FOMO (fear of missing out) among more institutions and retail investors, further pushing Bitcoin prices higher and fueling the bull market.
Grayscale is a well-known institutional player in the crypto industry. At the time, traditional capital had limited compliant channels to invest in Bitcoin, making Grayscale's Bitcoin Trust the preferred entry point for traditional institutions. Thus, in the early stages of the bull market, we frequently saw news about Grayscale increasing its Bitcoin holdings.
Retail investors, on the other hand, typically engage in small-scale, fragmented trades and are usually unorganized individual investors. Although the financial strength of a single retail investor is small, their sheer numbers and broad demographic coverage—including salaried workers, retirees, students, self-employed individuals, etc.—make their collective capital significant.
Generally, institutional investors are considered more rational in their investment approaches, with stronger risk awareness and asset management capabilities than retail investors. Retail investors are more susceptible to market sentiment, exhibit stronger herd behavior, and are easily influenced by news, institutional strategies, or market analysis when making investment decisions.
Which Crypto Assets Have Institutions Invested In?
Bitcoin is the top choice for institutional investors. First, as the first crypto asset, Bitcoin has a long history, and its "wealth creation story" is the most widely recognized. Institutions' understanding of cryptocurrencies often starts with Bitcoin. Second, Bitcoin has the largest market capitalization and the best liquidity, making it suitable for institutional-scale investments. MicroStrategy, a software company, is the publicly traded firm holding the most Bitcoin, while social media platform Twitter and mobile payment giant Square are also Bitcoin advocates. Even Meitu, when entering the crypto market, chose Bitcoin first.
After Bitcoin, mainstream crypto assets like Ethereum with high market capitalizations are also favored. Institutional investors tend to be more conservative and cautious in their crypto asset selections. Even though DeFi and NFT sectors are booming, institutions participate in these trends very carefully, whereas retail investors often adopt a more aggressive approach.
How Can Beginners Use Institutional Trends as a Reference?
As a beginner, how can you balance stability and aggressiveness? Staying rational is key. If you have limited understanding of highly volatile sectors, you can first observe the overall market situation, predict future trends, and then make decisions based on recent news and institutional movements. This is because institutional investors usually have a relatively mature strategy for selecting crypto assets.
Institutional investors often play a dominant role in the market. When beginner investors face numerous crypto assets and don’t know where to start, they can use these mainstream institutions as a reference.
It’s worth noting that blindly following institutional investments is not advisable. Institutional investors focus more on long-term project value, and their positions are built gradually rather than all at once, making them less affected by short-term volatility. However, for retail investors, short-term price fluctuations can significantly impact their decisions. For example, assets like BAT and LINK surged when Grayscale listed them on the 17th but plummeted on the 18th after the hype faded. Beginners who fail to time the market correctly may fall into the trap of buying high and selling low.
How Can Beginners Avoid Pitfalls When Following Institutional Investments?
For retail investors, the biggest enemy in market competition is not institutions but their own greed and fear. To stand firm in investments, you should:
① Conduct a risk assessment before investing and make choices based on your risk tolerance.
② Evaluate the value proposition of crypto assets and avoid problematic projects. If you doubt a project’s fundamentals, it will inevitably affect your investment confidence.
③ Develop a long-term/short-term investment plan. If you’re in it for the long term, don’t focus on temporary gains or losses. If you’re trading short-term, avoid reckless moves. Acting impulsively without a strategy can lead to losses in volatile markets.
④ Diversify your investments—don’t put all your eggs in one basket—and manage your crypto asset portfolio wisely.
⑤ Cultivate emotional resilience, maintain a calm mindset, and avoid being swayed by market sentiment.
Conclusion
Institutional investors often dominate crypto asset investments, while retail investors’ decisions lag behind. Thus, beginners must stay alert, monitor capital movements, plan their investments carefully, discard typical greedy thinking, and remember to take profits and cut losses timely to avoid emotional and impulsive investing.
