From Hype to Utility: How Crypto Investors Are Rewriting the Playbook
By Guy Gilliland, Christy Liu, Shichen Lian, Gaurav Garg, David Stavis, and Daniel Li
As the crypto investor landscape becomes more diverse — it is key to understand: What are the archetypes of crypto investors? What does each type care about? Where is investor sentiment trending in crypto?
I. The Evolution of Crypto — From Speculation to Strategic Allocation
Cryptocurrencies carry a controversial reputation. Headlines about overnight millionaires and meme coins dominate the conversation, fueling the perception of crypto as “speculative” and “unstable.”
Lost in the noise is a quieter, enduring truth: The underlying technology — decentralized, borderless, and programmable — offers solutions to some of the most persistent shortcomings in traditional finance.
Cryptocurrencies are not just theoretical experiments. They are already being used to address real-world inefficiencies, from slow and expensive cross-border payments to opaque banking infrastructure. That’s why, despite the volatility, cryptocurrencies and digital assets more broadly are steadily moving into the financial mainstream.
The statistics speak for themselves.
As of 2023, there are over 420 million crypto users globally, a number projected to exceed 1 billion by 2030 — a trend that mirrors early internet adoption. In the US, 17% of the population has invested, traded, or used crypto according to Pew Research Center. [¹] The total global crypto market cap now exceeds $2.8 trillion, spanning tokens, stablecoins, and tokenized real-world assets (RWAs). [²] Stablecoins alone have amassed $27.6 trillion in annual transaction volume in 2024, surpassing Visa and Mastercard combined, bolstered by adoption by enterprises such as Stripe & PayPal due to their ability to lower payment processing fees.
Institutional giants are, unsurprisingly, entering the space. BlackRock and Franklin Templeton have launched tokenized funds, exceeding $1.7B and $700M in AUM respectively.[²] Fidelity, Invesco, and VanEck, among others, have all rolled out Bitcoin and Ethereum ETFs, bringing crypto to traditional financial markets.
Attracted by a mix of diversification, long-term growth potential, and technological innovation, investors are increasingly viewing cryptocurrencies as a new alternative asset class. Unlike traditional portfolios built around equities and bonds, digital assets offer access to a market that operates independently from central banks and legacy economic cycles. For many, crypto is not just a bet on returns — it is a hedge against inflation, currency devaluation, and systemic financial risk.
Full-scale adoption, however, remains a significant challenge. The lack of clear regulations and consumer protections — unlike those in traditional finance — has contributed to several instances of market volatility (e.g. the collapse of FTX), eroded consumer confidence, and impeded market growth. The goal is not to burden cryptocurrencies with regulation, but to provide the regulatory clarity necessary to foster broad adoption by consumers, enterprises, and institutional investors.
To understand the investment landscape with regards to crypto, it is helpful to ask: What are the archetypes of crypto investors, retail and institutional? What does each type care about? Broadly speaking, where is investor sentiment trending in crypto?
II. Not All Investors Think Alike — A Typology of Retail Crypto Market Participants
As the crypto market continues to mature, so too do the profiles of its investors. The ecosystem is no longer dominated solely by “Bitcoin maximalists” or thrill-seekers chasing the next viral meme coin. Instead, a broader and more diverse investor base is taking shape — one that includes both retail participants and institutional players, each bringing distinct mindsets, strategies, and levels of sophistication.
For institutional investors, they are focused on the long-term value of blockchain technology itself. They are drawn to supporting crypto tech platforms that effectively match blockchain’s unique capabilities, such as traceability and immutability, with practical, real-world use cases.
This might look like, for example, a crypto tech platform that assists with supply chain traceability or with tracking an individual‘s environmental impact. These are experiences that would be cumbersome or impossible to build using traditional web2 technologies.
Retail participants are also increasingly looking for real-world applications of cryptocurrencies beyond just speculation and trading. Within the retail segment, investor behavior can be loosely grouped into five personas:
- The Passive Investor gains indirect exposure to crypto, typically through ETFs or other traditional financial products.
- The Bitcoin/Ethereum Investor focuses solely on Bitcoin and Ethereum, viewing them as stores of value akin to digital gold.
- The Altcoin Investor allocates funds to other major cryptocurrencies that serve practical use cases, such as cross-border payments, sustainability initiatives, or tokenization of real-world assets.
- The Narrative Chaser is drawn to trending, thematic investments — whether it is meme coins,AI-powered tokens, or metaverse-related projects.
- The Crypto Guru is deeply embedded in the ecosystem, going beyond investment to engage in staking, liquidity provision, and even operating validator nodes on blockchain networks.
A recent survey[²] of 2,500 individuals from the general U.S. population revealed that the top three personas that respondents most identified with were Bitcoin & Ethereum investors, Altcoin Investors, and Passive Investors — highlighting a shift toward more practical, long-term engagement with crypto, rather than speculative hype.
As Exhibit A demonstrates, the various investor personas differ regarding what infrastructure or platform they use, how they structure their portfolio, where they receive market knowledge, and what their overall market sentiment is.
On one end of the spectrum is the Passive Investor — someone who holds Bitcoin through an ETF or brokerage app like Fidelity. They likely have never used a crypto wallet or interacted with a dApp; in fact, less than 25% of them have a cold or hot wallet. That said, they are not detached from the crypto community. Over half of passive investors are perusing crypto accounts on X, and a third are active in crypto communities on Reddit. For them, crypto is a hedge — not a habit.
On the other end is the Crypto Guru — the deeply technical, always-on-chain power user. They do not just hold tokens; they stake, farm, govern DAOs, and run validators. 83% report participating in DeFi protocols, and 48% have participated in on-chain governance through a DAO. For them, crypto is not just an asset class — it is infrastructure.
In the middle is the Altcoin Investor. Like passive investors, they see the value in Bitcoin, but they are also actively exploring what else is out there. Like the Crypto Gurus, they are thoughtful and open- minded when doing research, but their research is not parsing gas fees or watching GitHub commits. Instead, they focus on real-world utility — how projects are being applied beyond speculative trading.
Altcoin Investors want to understand what the tech is actually doing in the real world. In fact, 40% ranked real-world applications or tokenization of real-world assets as one of the top themes they look for when making investment decisions, more than any other investor persona. While DeFi, NFTs, and gaming are on their radar, they are looking for what’s next. They are interested in chains that are enabling tangible use cases: payments with lower fees, more transparent supply chains, decentralized infrastructure (DePIN), and applications with real users behind them.
They are also more crypto savvy than most investors. 81% of altcoin investors have interacted in non-trading activities (e.g. staking, voting), with staking listed as the most common (59%). They are not sideline investors. They are immersed in the space, and their investment decisions are not based on hype, but on experience.
Preferences around investment themes are becoming more structured as well. 51% of respondents now prioritize the long-term value of Bitcoin and Ethereum as the most important theme in their investment decisions. Interest is also growing in projects focused on sustainability initiatives, artificial intelligence, stablecoins, and real-world asset (RWA) tokenization — signaling a broader appetite for tangible utility over speculative buzz. In contrast, only 8% of investors cited memecoins as a top priority, reflecting a clear shift toward fundamentals and lasting impact.
III. The Retail Investor’s Key Investment Criteria
When investors evaluate a crypto project, they typically focus on a few core dimensions:
1. Market Reaction
This includes market cap, price-based and liquidity-based signals — how a token is trading, where it islisted, how volatile it is, and how easy it is to enter or exit positions.
2. Blockchain-Based Metrics
These are indicators of on-chain traction and technical performance. Investors here look at network activity and efficiency, such as number of active wallets, TVL (Total Value Locked), decentralization level, and tokenomics (e.g. staking or inflation).
3. Real-World Use Cases
This category reflects how well a project connects with the real world. Investors here care about utility beyond speculation, such as whether a token powers enterprise applications, consumer products, or infrastructure like supply chains and payments. They value adoption and potential for growth.
4. Developer Ecosystem
Strong developer ecosystems tend to signal long-term viability. Investors looking at this category focus on GitHub activity, number of applications built, availability of developer tooling, and whether a chain is attracting builders through grants or hackathons.
5. Social Media/Community Activity
Rated highly by narrative-driven investors, community momentum is often a leading indicator of price action or user interest. This category includes social engagement, influencer buzz, virality, and presence on platforms like X/Twitter or Discord.
For Bitcoin Investors and Passive Investors, the investment thesis is straightforward — it is about store of value and portfolio diversification, respectively. Their criteria are relatively simple: BTC/ETH exposure, low volatility, and long-term conviction.
Where it gets more interesting is with Altcoin Investors and Narrative Chasers, two groups that dive deeper into what actually drives value. They share a few things in common. 50% of Altcoin Investors and 48% of Narrative Chasers both ranked “recent price trend” among their top three evaluation criteria. They are also more open to emerging categories — roughly a quarter from each group said they’ve invested in AI, DePIN, or RWA tokens in the past 12 months.
Altcoin Investors are more research-driven and care about real-world utility: 75% cited “real-world use cases” as a key signal, and roughly half use Messari or on-chain dashboards, such as Token Terminal, to evaluate fundamentals before entering a position.
Narrative Chasers, meanwhile, are far more responsive to social signals. 51% follow multiple crypto influencers, and about half ranked meme coins as a top theme they are excited about — more than any other investor persona. While Altcoin Investors are seeking early fundamentals rooted in real-world use cases, Narrative Chasers are looking for the spark before the explosion.
The result? One group waits for real-world proof. The other moves with hype.
IV. Crypto Through a Wall Street Lens: What Matters to Institutions
The institutional crypto landscape is increasingly diverse, ranging from crypto-native venture capital firms, hedge funds, traditional asset managers, family offices, and service providers. These participants differ in how they engage with the space, but many fall along a similar spectrum of investor personas as they do in the retail space, ranging from ETF-only exposure to more hands-on involvement, such as staking or offering validator-as-a-service.
What is particularly interesting, however, is not just how institutions are entering the market — it is what institutions look for when making investment decisions and how they are feeling about the market today.
The insights below are based on interviews with over 20 institutional asset managers and allocators actively investing in the crypto and Web3 space.
Across nearly every conversation, one thing was clear: Institutional investors rely heavily on fundamental blockchain and market metrics when evaluating tokens or projects. Unlike some retail segments driven by hype or narratives, institutions are firmly rooted in data — looking at indicators like total value locked (TVL), active wallet growth, developer activity, market cap, and trading volume as a baseline.
“We benchmark potential investments against BTC returns and look at blockchain metrics (such as TVL, wallet growth, etc.), market performance data, as well as developer activity.”
“Tokenomics is crucial — we prioritize projects with a fixed token supply or minimal inflation to help preserve long-term value.”
Most institutional investors source opportunities from a combination of inbound deal flow, existing network relationships, and active market monitoring. Some firms have dedicated research teams that track ecosystems in real time, while others rely on industry platforms like Messari, Token Terminal, CoinMetrics, and Dune, alongside newsletters, podcasts, and direct conversations with builders.
While their diligence remains rooted in fundamentals, institutional investors are actively looking beyond Bitcoin and Ethereum. They see crypto as a long-term asset class and a way to diversify portfolios. They increasingly believe the eventual winners will not be limited to the two dominant chains.
The common thread guiding these investment decisions? Real-world utility.
“To attract investors, projects need to have real-world utility beyond speculative trading and a proven business model to generate revenue/fees.”
Rather than chasing speculative upside alone, institutions are backing tokens and protocols that address practical problems. In fact, almost every single institutional investor we interviewed expressed a desire to see more crypto projects that offer real-world use cases beyond trading and payments.
Despite growing exposure, many institutional investors believe the space is still early in its evolution. Blockchain’s potential, they argue, extends far beyond current use cases. Emerging areas of interest include:
• AI agent — enabling 24/7 full autonomy in protocol operations.
• Stablecoin adoption and payments — enabling quicker and cheaper payments.
• Tokenization of real-world assets — enabling fractional asset ownership on chain.
• Digital identity and data ownership — enabling individuals to control and monetize their own data.
These priorities are shaping not just current allocations, but where institutions are placing long-term bets. For many, the goal is no longer just return potential — it is backing technologies with real, lasting impact.
V. Where Sentiment Is Headed: Real-World Utility
The crypto investor base today is more diverse, dynamic, and segmented than ever. While power users who had the ability to navigate complex wallets, bridges, and protocols used to dominate this space, it is now increasingly open to a wider range of participants. Thanks to the rise of structured products, more intuitive infrastructure, and a maturing regulatory landscape, more investors are entering the fold — each with different levels of conviction, motivations, and ways of engaging.
Despite this fragmentation, one theme consistently stands out: real-world utility.
Whether speaking to retail investors or institutions, the same question continues to surface: What does this project actually do? More and more, investors are prioritizing tokens and protocols that solve tangible problems, not just those that generate headlines. In fact, 74% of retail investors say real-world use case is a top factor when evaluating a token.
But today’s market still falls short of their expectations. Investors are looking for more than just incremental improvements; they want to see real-world use cases at scale. They are looking for crypto to transform entire industries: from sustainability and payments to identity and infrastructure. What they want to see are real applications, with real users solving real problems.
For builders, marketers, and investors, this calls for a shift in strategy. What worked a year ago — say, a viral meme coin or speculative narrative — is becoming less effective. The bar is higher now. Investors are maturing, and the industry needs to meet them there.
Crypto does not need to be louder. It needs to be useful — and that is what today’s and tomorrow’s investors will reward.
[¹]: As of October 2024
[²]: As of April 2025
Disclaimer
None of the research and examples presented in this article are intended to endorse any specific company or technology platform in any way
