A recent set of data worth noting: in Q1 2024, 60% of institutional funds flowing into the crypto market come from traditional financial institutions (banks, fund companies, etc.), doubling the proportion compared to 2023. Why are traditional financial institutions starting to get involved in crypto assets? Ultimately, they are building a "funding channel," and this channel is pushing the connection between the crypto market and traditional finance to new heights.

**Three Entry Paths**

There are roughly three ways traditional financial institutions are entering the crypto space. First, through compliant crypto asset funds—these funds have robust risk control systems and regulatory frameworks; second, through affiliated investment companies conducting project investments—this allows risk diversification and flexible deployment; third, by providing custody and trading services for high-net-worth clients. These institutions often manage funds in the billions or even hundreds of billions, and their inflows and outflows not only directly impact the crypto market but also reshape traditional financial risk preferences.

**Real-World Cases Speak**

In January 2024, on the day a leading exchange's Bitcoin spot ETF was approved, a large influx of 20 billion in funds occurred. The source of these funds is clear—many stock funds reduced their holdings in tech stocks and redirected capital into Bitcoin ETFs. As a result, Bitcoin surged 10% in a single day, while the S&P 500 tech sector fell 1.2% during the same period. This is a typical "counterbalancing" phenomenon of capital flow. Negative cases also exist: after the Silicon Valley Bank turmoil in October 2023, traditional financial institutions, for self-protection, redeemed about 15 billion from the crypto market, exerting noticeable pressure. These events clearly demonstrate that the link between crypto and traditional finance can no longer be ignored.