"Traditional money" is flowing into crypto. This former Goldman exec explains why

Investing.com - The flow of "traditional money" into the cryptocurrency industry is "not surprising" as recent trends in the sector entice institutions looking to diversify their investments, according to former Goldman Sachs Executive Director Hong Yea.

Inflows into exchange-traded funds tracking Bitcoin, the world’s largest digital token, from Wall Street came in at $35 billion in 2024, Forbes recently reported, adding that a further $50 billion has streamed into these funds so far this year.

BlackRock (NYSE:BLK)’s iShares Bitcoin Trust’s net asset value total return has surged by more than 25% this year. Net assets in the fund, which was only launched in January 2024, now stand at more than $86 billion. By comparison, the SPDR Gold Shares (NYSE:GLD) ETF took 15 years to reach that level, Forbes noted.

Speaking to Investing.com, Yea, now the CEO of peer-to-peer financial platform Grvt, argued that interest in the cryptocurrency sector has been bolstered by U.S. President Donald Trump and his family actively promting their own -- albeit controversial -- memecoin, known as $TRUMP. Trump, once a critic of the crypto industry, heavily courted its support prior to his presidential election victory last year.

Sovereign wealth and public pension funds stretching from Abu Dhabi to Wisconsin have also disclosed investments in Bitcoin ETFs. Meanwhile, major crypto companies have either completed or are in the process of pursuing initial public offerings, "marking their entry into public markets," Yea noted.

Last week, the U.S. House of Representatives also passed -- with rare bipartisan backing -- key cryptocurrency-related legislation. One of the bills, known as the the "GENIUS Act," requires stablecoin issuers to hold high‑quality, dollar‑equivalent reserves and undergo regular audits, while establishing both federal and state supervision.

Yea said the measure represented a "critical indicator" for the crypto industry that demonstrated "a move towards clearer regulatory frameworks."

"It is therefore not surprising to see ’traditional money’ continuing to flow into the digital asset space," Yea said.

Outside of the U.S., regions such as the United Arab Emirates and Hong Kong, have become global hubs for digital assets and are advancing their own crypto agendas, Yea added.

The price of Bitcoin inched down on Tuesday, headlining a drop in broader cryptocurrency prices as the sector saw some profit-taking after a stellar run-up over the last two weeks.

Bitcoin had surged to record highs of over $123,000, while altcoins also rallied as crypto bulls cheered the U.S. government’s passage of key crypto regulation. The token was also boosted by Trump’s tech company, Trump Media & Technology Group Corp., disclosing a $2 billion stockpile of the crypto.

But this rally was seen running dry, with Bitcoin having pulled back sharply from recent peaks. Other altcoins also clocked some losses after strong gains in recent sessions.

Risk appetite was seen cooling as well amid growing uncertainty over the trajectory of Trump’s tariffs, which will take effect from August 1, as well as a Federal Reserve meeting next week.