By Claire Sawyer, Associate Director of Content Development, CAIA Association
Crypto has come a long way from the days of Bitcoin pizza purchases and garage mining rigs. It’s evolved into a $2 trillion-plus asset class that’s now (to the clear exasperation of some investors) impossible to ignore. Despite this growing awareness and some headline-worthy milestones, adoption is still in its awkward teen phase: promising, but not exactly mature.
To understand why crypto remains on the fringe of mainstream portfolios, our hosts were joined by Greg Tusar and Robert Mitchnick to explore the timeline of crypto’s evolution, 3 core hurdles that are still holding it back, how institutions are navigating the space today, and what to watch as the next chapter unfolds.
Mapping the Journey: A Four-Phase History of Crypto
To understand where we are, we need to see where we’ve been. Here's a quick history of crypto adoption through four distinct eras:
The Primitive Stage (Pre-2009): Well before most of us had ever heard the term “crypto,” groundwork was being laid by pioneers in the space. Some proto-digital currencies emerged, but none of them stuck around.
The Novelty Stage (2009–2016): The infamous whitepaper from Satoshi Nakamoto went live in late 2008. Bitcoin launched in 2009. Satoshi mysteriously disappeared in 2010, the same year that Bitcoin was used in its first commercial transaction: two Papa John’s pizzas for 10k BTC (you’ll have to tune into the episode for the eye-watering translation to today’s prices). Ethereum arrived in 2015, unlocking smart contracts and the rise of DeFi.
The Eyebrow-Raising Stage (2017–2021): Public awareness exploded. Howard Marks called crypto a fad, Jamie Dimon called it a fraud, Warren Buffet called it rat poison, and Michael Burry said it was nothing but magic beans. Meanwhile, Yale, Harvard, Stanford, MIT, and others quietly started investing. Coinbase IPO’d, and Bitcoin hit a high of 61k. Momentum was building fast.
The Schizophrenia Stage (2021–2024): NFTs boomed and busted, FTX imploded, and regulation started ramping up. Amidst this chaos, the ecosystem matured; some projects died, but the survivors came out stronger.
Three Core Hurdles of Crypto Adoption
1. An Identity Crisis: What is Crypto?
Depending on the day (and who’s pitching it), crypto might be described as a commodity, a security, a currency, or a tech stock in disguise (my preferred metaphor is 4 raccoons in a trench coat…do with that what you will). It's been called everything from “digital gold” to the “highest beta asset on the planet,” and it continues to defy easy classification. Robert touched on this identity crisis, noting:
“It’s actually incredible to see how much damage the industry has managed to do to itself by leaning into this risk-on, risk asset narrative in spite of the fact that it makes no fundamental sense to treat it that way… It’s just confusing because the digital gold narrative investment thesis makes intuitive sense to a lot of these folks. It’s a global, scarce, non-sovereign, decentralized asset. It’s not tied to any country or any one monetary or political system, so it’s in a sense insulated from all that… Yet I look at the tape and sometimes it looks like it’s really highly correlated and it’s risk-on... It’s created immense confusion as a result, and most of it is self-fulfilling.”
Even regulators can't agree on a label. The CFTC sees Bitcoin as a commodity, while the SEC views many tokens as securities. For institutions that crave definitional clarity before allocating capital, this lack of consensus makes crypto feel more like a regulatory minefield than an exciting opportunity. Counter to the typical adage that less regulation is beneficial to free markets, for crypto, it’s kept prospective investors waiting on the sidelines. Few are keen to play the game while the referee’s making up rules as they go.
2. Valuation Challenges
How do you price Bitcoin? Its built-in scarcity makes it compelling in theory, immune to inflation and central bank manipulation. There’s an obvious appeal if you see it as a hedge, but its increasing correlation with equities has undermined this “diversifier” status. And for other tokens? The valuation story is even murkier. Without a supply constraint, pricing often relies on utility-based metrics: network effects, user activity, and speculative demand. Without a shared valuation framework, crypto struggles to earn a seat at the institutional table. As Robert said in the episode:
“Bitcoin has gone up basically a million x since it first started trading in July of 2010. Even if you narrow that and you take out the early years when the returns were particularly astronomical, it’s averaged just over 50% annualized for the last decade. That is a really hard expected return assumption to then try to use as a baseline going forward because it just doesn’t feel realistic to anyone.”
3. Missing Institutional Infrastructure
Even the most ardent believers need some guard rails, and institutions require more than anonymous whitepapers and evangelizing Twitter threads. They need regulated custody, compliant trading desks, legal clarity, and reporting infrastructure that integrates with existing systems.
While players like Coinbase and Bitwise are building that foundation, they’re still not viewed as traditional, reliable partners by large LPs. Until that perception changes and the infrastructure matures, institutions won’t be willing to play ball. As Greg said in the episode:
“You have to play the long game. You have to invest in all the meetings and all the things that lead up to the moment and be willing to work with customers.”
Is This the Golden Age?
The short answer: maybe. If the January 2024 approval of spot Bitcoin ETFs was the turning point, we could be entering a new era of mainstream institutional adoption. But, as of right now, crypto remains a retail-dominated space. According to a report from Bitwise:
70% of Bitcoin is held by individuals
7.5% is likely “lost”
5.7% is unmined
~6% is held by funds and ETFs
~6% is held by businesses or governments
That leaves only a sliver in institutional hands, suggesting massive headroom but some clear hesitation. Even some of the institutional investors that are allocating to crypto are not viewing this as a long-term investment but rather using it as an arbitrage opportunity or a way to take advantage of volatility. Some of this hesitation may be alleviated by prospective regulation, which could manifest in a few ways.
One is definitional clarifications that offer some of the guardrails institutional investors are looking for. As Greg noted in the episode:
“Any regulation, number one, really needs to clearly define a token taxonomy. What’s a security? What’s a commodity? What does consumptive use mean? How do we clearly define stablecoins? And fortunately, I think the regulation that’s coming attempts to do all of those things.”
Another avenue is the restriction of certain activities currently deemed high risk for investors. Robert notes:
“It’s important to remember that what’s happening now is not about the removal of regulation. Up till now, the U.S. hasn’t had any… not an actual regulatory oversight or framework of a significant kind. What we’re going to see now actually is more regulation, and I think there may be some surprises, where people thought that what this whole new regime meant was ‘everything goes.’ I think they’re going to be disappointed because there’ll be some things that come out of this that actually restrict certain types of activities, particularly ones that would have posed excessive risk to investors.”
Perhaps counterintuitively, these restrictions may be just what the industry needs for larger players to enter and meaningfully embrace the crypto landscape.
So… Are We Really Doing This?
Signs point to yes, albeit slowly. The infrastructure is maturing and there appears to be some momentum behind the narrative (though the narrative is still leading). Is crypto the next Amazon in 1998 or 2005? That’s certainly up for debate. But one thing is clear: the door for institutional adoption is opening.
The question is: who’s ready to step through it?
About the Contributor
Claire Sawyer is Associate Director of Content Development at CAIA Association. Prior to her current role, she served as Program Manager and Relationship Manager for the UniFi by CAIA™ learning platform. She holds the Sustainability and Climate Risk (SCR) certificate from GARP and is a Level 2 CAIA Candidate. She earned a BA in Legal Studies from UC Berkeley.
Learn more about CAIA Association and how to become part of a professional network that is shaping the future of investing, by visiting https://caia.org/