Institutional capital is returning to digital assets, but this cycle is vastly different from the previous one.
Prediction markets are beginning to attract serious attention from Wall Street, Bitcoin exchange-traded funds (ETFs) are seeing another wave of significant capital inflows, and top venture capital firm a16z is increasing its investment in another billion-dollar crypto war fund. Meanwhile, traditional banks are quietly accelerating their deployment of tokenized financial infrastructure.
Overall, this week’s Crypto Biz points to a broader shift occurring across the industry: crypto companies are no longer solely targeting retail traders but are increasingly building products for asset managers, banks, hedge funds, and institutional investors seeking regulated access to digital assets.
Prediction markets compete for institutional capital
After Kalshi executed what Bernstein analysts called the industry’s first customized institutional block trade, prediction markets began attracting institutional interest. The trade involved a customized contract tied to California carbon allowance auctions and was facilitated with liquidity support from Jump Trading.
Bernstein analysts stated in a recent client report that this transaction marks a significant step in the evolution of prediction markets from retail-driven speculation toward a more mature class of financial products. Institutional investors are increasingly viewing event contracts tied to macroeconomic policies, elections, and geopolitical developments as hedging tools.
The report also highlights that regulated infrastructure is becoming an increasingly focal point in the field. Kalshi operates within the U.S. regulatory framework, while its decentralized competitors primarily grow through native crypto platforms outside traditional financial channels. Bernstein believes that broader institutional participation could ultimately drive prediction market trading volumes to trillions of dollars.
Kalshi's largest active event contract. Source: Bernstein
Bitcoin ETFs recorded $1 billion in inflows, and BTC returned to $80,000.
U.S. spot Bitcoin ETFs recorded nearly $1 billion in net inflows, while BTC reclaimed the $80,000 level, highlighting a renewed demand from institutions for exposure to crypto assets.
According to SoSoValue data, this inflow represents one of the strongest single-day performances in the ETF sector in recent months and coincided with broader strength in the digital assets market.
Analysts believe that ETF demand reflects improved investor sentiment and ongoing institutional buying of Bitcoin exposure through regulated investment products. The latest inflows continue the strong momentum seen in April, when Bitcoin ETFs attracted $1.97 billion.
After BTC reached $80,000, inflows into Bitcoin ETFs accelerated. Source: SoSoValue
a16z Crypto raises $2 billion, betting on the next wave of crypto fundraising
Andreessen Horowitz’s crypto venture capital arm, a16z crypto, has raised $2 billion for a new crypto-themed investment fund, marking one of the largest venture capital commitments in the space in recent years.
The fund will focus on investing in crypto startups spanning blockchain infrastructure, Web3 applications, and decentralized finance. This move comes as venture capital activity begins to show signs of recovery following a prolonged slowdown in the digital assets market. Although crypto fundraising remains significantly below 2021 levels, venture capital continues to flow toward early-stage companies building the core infrastructure of the industry.
During market downturns, a16z has been one of the most influential venture capital firms in the crypto space, investing across gaming, stablecoins, developer tools, and decentralized networks.
Source: a16z crypto
Tennessee bankers choose Stablecore for digital asset services
The Tennessee Bankers Association has selected Stablecore as its preferred digital asset infrastructure provider, opening the door for approximately 175 member banks to access cryptocurrency-related banking services.
This partnership focuses on helping financial institutions integrate stablecoins, tokenized deposits, and other blockchain-based payment tools into their business operations.
Stablecore provides backend infrastructure that enables banks to offer digital asset services without building their own cryptocurrency technology stack. The company states that its platform supports tokenized assets, stablecoin functionality, and compliance integrations for regulated financial institutions.
This agreement reflects growing interest from regional and community banks in digital asset infrastructure as traditional finance continues to expand into blockchain payments and tokenization.
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