Introduction

The characteristic of a bull market is the continuous rise in asset prices, with investors generally holding optimistic expectations. As buying pressure significantly increases, it further strengthens the upward price trend. In the cryptocurrency market, this is specifically reflected in the rapid increase in major asset prices, significant growth in trading volume, and continuous media coverage that fuels market sentiment, creating a positive feedback loop that drives the continuation of the market trend.

The crypto market has experienced a bull run in the past two years. With the advantages of blockchain technology in transparency and security, cryptocurrencies have provided global investors with opportunities for decentralized portfolios and cross-border transactions. People have gradually recognized the unique value of asset tokenization. According to an evaluation from a research report, the global asset tokenization platform size was $500 million in 2023 and is expected to grow to $1.67 billion by 2032, with an annual growth rate of 13.8%. This trend indicates that crypto assets are increasingly integrating into the global economic system. In the future, with the widespread application of tokenized assets, the crypto market will have a deeper impact on the traditional financial system.

The asset tokenization market size is expected to grow (Source: businessresearchinsights.com)

The global economy is undergoing profound changes. By the end of 2024, the crypto market reached an important turning point. Trump’s return to the White House has increased investor sentiment. Considering the relatively loose regulation during his first term, the current market has heightened expectations for regulatory relaxation. The latest “2024 Future Finance Report” from Sygnum also pointed out that investors are generally confident about the crypto market’s long-term prospects and are actively seeking growth opportunities through diversified investment strategies to maximize returns.

Although the market is growing rapidly, investors also face multiple challenges, such as high volatility and changes in regulatory policies. Therefore, a clear investment strategy is crucial for achieving steady growth in market investments in 2025. This report, based on an in-depth analysis of the 2024 crypto market and the latest financial report data, interprets the allocation strategies commonly adopted by investors during a bull market and the latest market developments.

Asset Allocation Trends

A. Traditional Asset Tokenization

Blockchain technology is the driving force behind bringing traditional assets into the digital trading and online settlement “trillion-dollar era.” For example, last year, many financial giants, such as Goldman Sachs, JPMorgan, Visa, and DTCC, announced the launch of tokenization platforms, demonstrating the openness of traditional institutions to embracing new types of assets. Asset management companies like BlackRock, Fidelity, and Janus Henderson are also actively promoting tokenization projects for U.S. Treasury bonds and money market funds. Some institutions have even focused on illiquid alternative investment assets, tokenizing ownership of non-liquid assets such as art and real estate. Traditional assets are gradually being tokenized.

Looking back at the allocation changes over the past two years, the market’s focus on tokenized equity has remained high, showing the strong appeal of high liquidity and easily tradable assets. Traditional investment routes typically have high entry barriers, limited liquidity, and a lack of diversification. However, asset tokenization platforms offer fractional ownership, allowing investors to purchase smaller units of high-value assets, providing investment opportunities to a wider range of individuals, including retail investors, who can now access assets previously out of reach. This has led to more investors recognizing the benefits of asset tokenization platforms in expanding investment portfolios, driving market growth.

An increasing number of traditional assets are being tokenized (Source: Sygnum Institutional Research Department)

From the trends observed over the past two years, the growth of token platforms targeting specific asset classes (such as real estate and art) has slowed, indicating that the crypto market is gradually maturing. Previously, many platforms focused on providing customized solutions for specific types of assets to address the unique needs and complex regulatory environments of various assets. However, as the market’s understanding of asset tokenization deepens, the industry has gradually realized that tokenization is not a one-size-fits-all solution for all assets. While custom platforms can offer more precise services in niche markets, universal applicability and flexibility may be more attractive to a broader user base. This trend may signal that the crypto industry is transitioning from an “over-customized” development model toward a more efficient and standardized direction.

B. Holders Continue to Add Positions

Thanks to the approval of U.S. spot Bitcoin and Ethereum ETFs and their record market performance, market trust in crypto assets and investor sentiment have been strengthened, demonstrating the active participation of traditional financial institutions in the crypto space. The launch of these ETFs, on the one hand, provides institutional investors with a passive investment channel to access the crypto market, and, on the other hand, solidifies market recognition. For example, the U.S. Securities and Exchange Commission’s classification of Ethereum as a commodity has granted Bitcoin and Ethereum a “legitimacy stamp.”

Currently, many investors are still waiting for the optimal time to make decisions. Over half of investors plan to increase their digital asset allocations in the next six months, while only a small portion intend to reduce their positions in the crypto market, indicating that despite volatility challenges, investors remain optimistic about the long-term potential of the market. Research also shows that investors planning to maintain their asset allocations will increase their holdings more quickly when market conditions improve, as most investors expect the crypto market in 2025 to be more optimistic.

Statistics on Users Deciding to Continue Holding Crypto Assets (Source: Sygnum Institutional Research Department)

C. Diversified Crypto Allocation

Cryptocurrencies have a low correlation with traditional assets, which is why many institutional investors view them as an effective tool to optimize the risk-return ratio, especially during economic cycle fluctuations, where they often demonstrate significant risk diversification benefits. In this context, many institutions planning to maintain or increase their investments tend to diversify their digital asset allocations, showcasing long-term confidence in the potential for growth in the sector.

At the same time, many institutions have shown a strong interest in high-risk, high-return products, gradually strengthening cooperation with regulated service providers and actively exploring compliant investment paths. This reflects market participants’ improved risk tolerance. It also shows that when building more balanced and risk-resistant investment portfolios, investors are starting to introduce high-risk, high-return financial instruments, especially as global economic uncertainty increases, with more people seeking diversification strategies with potentially high returns.

Reasons for Plans to Increase Holdings in Existing Crypto Assets (Data source: Sygnum Institutional Research Department)

Sub-segmented Popular Areas

Nearly 90% of respondents have allocated mainstream tokens, such as Bitcoin and Ethereum, in their portfolios. Analysis suggests that these mainstream tokens are investors’ top choice due to their high liquidity and trading volume. This characteristic is particularly valuable during market volatility, as it enables quick buying or selling of assets to manage risk. Furthermore, as the core assets of the crypto market, Bitcoin and Ethereum have developed relatively mature market ecosystems, including a wide range of application scenarios, a broad investor base, and stable infrastructure support. This means they can offer investors more diverse asset appreciation opportunities.

In addition, the market’s focus on stablecoins is still increasing, with about half of market participants holding stablecoins. These are viewed as reliable tools for entering and exiting the cryptocurrency market, mainly due to their functionality in arbitrage and rapid trade adjustments. This preference for stability during market uptrends also signals the importance of institutional-grade products and service providers that can offer regulated services in the market.

Types of Crypto Investments Currently Being Made (Data source: Sygnum Institutional Research Department)

Currently, cryptocurrencies are viewed as an emerging asset class and are not just considered as a single investment tool. They serve multiple functions across various scenarios, such as being a store of value (similar to gold), a medium of exchange (similar to traditional currency), and supporting the operation of decentralized applications (DApps) as financial infrastructure. These functions continue to drive the expansion of token application scenarios.

Layer 1 blockchains occupy an important position in future potential areas, mainly due to the early appeal brought by mature assets like Bitcoin and Ethereum. However, with the impressive performance of competitors like Solana, Tron, and TON blockchains over the past two years, the market landscape is gradually changing, further sparking investor interest in emerging public chain projects.

In other emerging subfields, Web3 infrastructure is also gradually coming to the forefront, becoming the second most watched area. This trend is driven by the rapid growth of Artificial Intelligence (AI) and Decentralized Physical Infrastructure Networks (DePIN), especially as traditional institutions increase their participation. At the same time, active involvement from large tech companies has accelerated the development of Web3 infrastructure. With the accelerating pace of technological innovation and capital inflow, this field is expected to continue expanding, providing investors with more growth opportunities.

Types of Crypto Investments of Interest (Data source: Sygnum Institutional Research Department)

Differentiated Analysis

During a bull market, the overall trend of crypto asset allocation provides macro direction for the market, but specific investment behaviors show distinct needs and strategy preferences among different types of investors. Currently, the main market participants can be divided into the following three categories:

a. Retail Investors

The current market offers retail investors various crypto investment products, such as trusts, private equity funds, index funds, and ETFs/ETPs. These products open the door to the crypto asset realm for novice participants. With the gradual improvement of global regulatory frameworks, more products tailored for retail investors may emerge in the future, such as mutual funds and other new options.

Direct token investment is the most popular method, reflecting novice investors’ preference for directly owning crypto assets and their confidence in the growth potential of mainstream tokens. Many respondents believe that through direct token investment, they can have better control over asset ownership and participate in various incentive mechanisms within the crypto ecosystem, such as staking and yield-generating options. Although yield-generating strategies are often seen as high-risk speculative behavior, they still attract some investors to a certain extent.

At the same time, some investors show interest in actively managed products, possibly hoping to gain exposure to the industry or optimize financial management through professional investment services. This demand aligns with the current trend of personalized investment.

Less than 20% of investors choose on-chain asset management products, likely due to the technical complexity of such products, which require investors to have a certain level of blockchain knowledge and operational ability. For most retail investors, especially those without a strong technical background, on-chain asset management is viewed as a higher barrier to entry. Therefore, they typically prefer traditional investment methods, such as private equity funds or index funds, which are relatively easier to understand and operate, and help reduce complexity and technical risks to some extent.

Current Focus of Crypto Investment Products (Source: Sygnum Institutional Research Department)

b. Institutions & High-Net-Worth Individuals

Regarding investment strategy, institutional investors tend to prioritize risk management and choose passive exposure and derivatives to achieve steady asset growth while hedging market risks. From a certain perspective, venture capital is also seen as part of the long-term strategy for institutions, reflecting professional investors’ long-term plans for developing the crypto industry. However, in a bull market and under rapidly changing market conditions, this strategy may limit their flexibility during market turbulence, causing institutions to miss opportunities for high returns. Additionally, while the use of derivatives can effectively hedge certain risks, it may also expose investors to greater market volatility, requiring a high level of market forecasting.

High-net-worth individuals’ investment behavior is similar to that of retail participants, often engaging in frequent market trading and preferring short-term high returns rather than focusing on the compounded effect of long-term holding. This choice reflects their preference for flexibility and proactivity. It is important to note that pursuing short-term gains also requires investors to bear higher market volatility risks.

A common trait between institutional investors and high-net-worth individuals is that both show relatively low interest in outsourcing asset management, yield generation, and arbitrage. Firstly, outsourcing investment tasks often involves delegating some investment decisions to third-party managers, which can sometimes raise concerns over asset control and investment direction. For investors with higher asset scales, active control and flexible adjustment of investment strategies better meet their needs, so they tend to manage their investments personally or choose highly customized investment plans.

Although arbitrage can capture profits through low-risk price differences, it typically requires fast and efficient execution. Arbitrage often relies on instantaneous market price fluctuations and high-frequency trading, demanding strong technical support and liquidity. Therefore, most institutions and high-net-worth investors view this strategy as too complex and time-consuming, deeming it inefficient.

Comparison of Strategy Preferences Between Institutional Investors and High-Net-Worth Individuals (Data source: Sygnum Institutional Research Department)

c. Watch-and-Wait Investors

Watch-and-wait investors, who have yet to enter the cryptocurrency market, include traditional institutions, high-net-worth individuals, and a large number of retail investors. These groups are gradually overcoming concerns about market volatility. An increasing number of respondents indicate plans to enter the digital asset space within the next 12 months, signaling growing interest in the emerging asset class. As the market environment matures, more capital is expected to flow into the crypto asset market by the second quarter of 2025 and beyond.

Watch-and-wait investors are becoming more open to crypto assets, driven by multiple factors. Firstly, the global economic situation has improved, and the gradual clarification of regulatory frameworks in various countries has collectively boosted investor confidence. Secondly, technological innovations in the cryptocurrency space and increasing recognition of digital assets by mainstream financial markets are raising awareness of this asset class’s unique potential, prompting traditional investors to consider integrating it into their portfolios, albeit waiting for the right entry point.

The shift in the attitude of watch-and-wait investors reflects the market’s transition from the highly volatile early stage to a more rational and stable development phase. Cryptocurrencies are no longer seen purely as speculative assets but are increasingly recognized as a long-term investment category with enduring value. Overall, even conservative investors are steadily increasing their interest and acceptance of risk assets.

Short-Term Holding Strategies for Two Types of Cryptocurrency Investors (Source: Sygnum Institutional Research Department)

Challenges and Opportunities

The cryptocurrency market has made significant progress over the past twelve months. Positive regulatory developments, the emergence of new industries and investment products, and the increasing competition surrounding major assets like Bitcoin and Ethereum have continually attracted the attention of financial institutions and individual investors, encouraging them to seek potential investment opportunities actively.

From a longer-term perspective, neutral and panic sentiments are in a weak cycle. With the continuation of the interest rate reduction cycle and the potential launch of certain altcoin spot ETFs, market sentiment in 2025 may become more optimistic, attracting more new capital into the market. Most investors believe the cryptocurrency market is gradually absorbing the current macroeconomic advantages and establishing a solid footing within the traditional financial system. The general consensus is that the macroeconomic situation signals a new growth phase for the crypto market in 2025.

However, during a bull market, the rapid growth of the cryptocurrency market will first draw heightened attention from regulatory authorities, prompting governments to introduce relevant regulations. For example, the European Union’s “Markets in Crypto Assets” (MiCA) aims to provide a unified regulatory standard for the entire European region. However, excessive regulation may stifle innovation, forcing crypto companies to relocate to regions with more lenient regulations. Therefore, regulatory authorities in various countries should strike a delicate balance between ensuring a safe market environment while fostering innovation and development.

Comparison of Major Cryptocurrency Asset Regulatory Frameworks (Source: finance.sina.cn)

As more investors participate in the cryptocurrency market, the load on blockchain networks has rapidly increased, raising higher demands for scalability. In response to this challenge, many crypto projects are actively developing second-layer solutions such as the Lightning Network and sharding technology. Technological advances in blockchain scalability and user interfaces (UI/UX) may help bridge the gap between Web2 and Web3, promoting the broader adoption of cryptocurrencies in the future. From this perspective, technological progress can further drive the evolution of the crypto market.

It is important to note that investor behavior during a bull market also affects market volatility. When the market is in an uptrend, many investors rush in, which can trigger overly optimistic emotions and bubble risks. As the bull market ends, the market may quickly reverse, and investors panic-sell, exacerbating market fluctuations. Market participants need to possess a certain level of market judgment, enhancing their understanding and application of various financial instruments, especially in the use of derivatives and hedging strategies. Even in highly volatile environments, investors can avoid potential risks and achieve asset preservation and appreciation through flexible strategies.

From a full-cycle perspective, bull and bear markets typically show alternating cycles of fluctuations (Source: coinglass)

Summary of Patterns

“Compliance and Regulation” as the Foundation of Trust

Traditional centralized financial institutions have widely implemented regulations such as Anti-Money Laundering (AML) and Know Your Customer (KYC), which aim to identify participants in the financial system and monitor their behavior to prevent financial institutions from being used for malicious activities.

Therefore, compliance and regulation will also be the foundation of trust in the crypto market, ensuring the market’s compliance and transparency, and providing investors with a more reliable investment environment. This is an inevitable trend for the crypto market to gradually become a mainstream investment field.

KYC Operations in Blockchain Applications (Source: ideausher)

“Industry Education” as the Growth Engine

The demand for blockchain industry knowledge among investors is significantly increasing, especially when faced with complex decentralized protocols. High-quality education can help investors identify early opportunities, accurately value assets, and understand key issues like security and custody.

Data shows that both active cryptocurrency investors and those with a cautious attitude generally express curiosity about blockchain and a need for education. They seek to understand cryptocurrency valuation models, market trends, and driving factors. Most investors stated that a better understanding of this asset class would make them more willing to invest or increase their investments.

Trends indicate that traditional financial markets are becoming more open to emerging investment categories. More and more investors are no longer viewing it as an unknown territory but as a promising new paradigm. In the future, the crypto market is expected to attract more long-term capital inflows.

Gate Learn is one of the leading crypto learning platforms (Source: gate.io)

Recommendations

Firstly, controlling position size is key to risk management. As an investor, you should avoid putting all your funds into the market and aim to allocate 30%-50% of your assets for investment to reduce the impact of market fluctuations. It is also advisable to adopt a diversified investment strategy and avoid concentrating funds in a single asset. In addition to mainstream cryptocurrencies like Bitcoin and Ethereum, you may also consider allocating a small proportion to potentially promising altcoins, but this should be done with caution, as altcoins generally carry higher market risks.

Once startup funds are ready, the next step is to research the projects thoroughly. The crypto market has a certain learning curve, but beginner investors should still have a basic understanding of blockchain, including the underlying technology, real-world applications, and the project team’s technical capabilities and past successful experience. These factors will help investors assess whether the project has long-term investment value.

During the holding period, you should consider dynamic changes in the investment cycle. Although bull markets show strong upward trends, short-term market fluctuations may still occur. There is no need to make frequent trading decisions due to short-term market adjustments. If your goal is long-term investment, focus on the project’s fundamentals; if you aim for short-term speculation, you should strictly set stop-loss and take-profit strategies to cope with unexpected market volatility.

The Four Stages of the Crypto Market Cycle (Source: ecos.am)

In addition, investors should closely monitor industry policies and regulatory developments. The nature of the cryptocurrency market makes it highly sensitive to policy changes, and adjustments in the regulatory environment can have a significant impact on market trends. For example, newly introduced regulations may directly affect the legality and liquidity of certain assets, thereby causing substantial shocks to market prices. Therefore, carefully managing market sentiment fluctuations and considering policy factors in investment decisions are key strategies for achieving steady returns in a bull market.

Finally, maintain a sound investment mindset. Bull markets often lead to heightened investment sentiment, and short-term price increases may tempt investors to make irrational decisions. Avoid blindly following the crowd, especially when facing speculative coins with no real value backing. Investors should adhere to their investment plans, focusing on value analysis, and avoid deviating from their original investment intentions due to emotional fluctuations. At the same time, monitor the market fundamentals and policy developments, combining them with your own risk tolerance, in order to maximize returns from excellent growth opportunities.