Investor trust and the growth of ETFs bring steadiness to the crypto market, transforming how startups approach risk management

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As cryptocurrency investing continues to transform, mounting research highlights a crucial truth: the prosperity of crypto startups and their larger ecosystem heavily depends on the trust and engagement of investors. According to a recent ScienceDirect publication, business founders in the crypto sphere are increasingly using digital currencies to safeguard against operational risks, reflecting the sentiment that "the essence of investing lies in backing people." This analysis, which reviewed data from 31 million American entrepreneurs in 2022, determined that 95% of respondents showed a significant inclination toward holding cryptocurrencies as a means to diversify risk. This pattern demonstrates that many entrepreneurs, confronted with unpredictable earnings and potential downturns, are adopting crypto assets to stabilize their financial positions.

The conclusions of this research are echoed by larger market trends. For example, the introduction of spot

and ETFs towards the end of 2024 led to over $68 billion in new investments, generating lasting demand that helps counteract market swings. This influx of institutional capital has altered the risk landscape for cryptocurrencies, giving entrepreneurs greater access to liquidity and lessening dependence on short-term retail speculation. Meanwhile, the value of stablecoin reserves has surged to $54.9 billion, cushioning against sudden price drops and further supporting the view that crypto startups are increasingly woven into standard financial frameworks.

Shifts in regulation add another layer of context. The United States and the European Union have taken different paths on crypto oversight, with the EU’s Markets in Crypto-Assets Regulation (MiCAR) setting tough rules for stablecoins and trading platforms. In contrast, policies from the Trump administration—such as advocating for a strategic bitcoin reserve and resisting a U.S. central bank digital currency—point to a more innovation-friendly regulatory stance. Such policy environments matter greatly for entrepreneurs, as they help reduce business ambiguity and appeal to major investors who are cautious about regulatory loopholes.

Investor actions are equally vital for the health of crypto startups. The research observes that entrepreneurs often tap into venture capital and public markets for growth funding, with big institutional entities like MicroStrategy and

amassing notable portfolios of Bitcoin and Ethereum. This accumulation not only helps keep asset prices steady but also conveys strong optimism about the sector’s future, inspiring smaller participants to invest as well. The expanding market for staked ETFs and tokenized assets, as detailed in PwC’s 2025 Global Crypto Regulation Report, has broadened avenues for passive returns, helping to create a more resilient crypto ecosystem.

Yet, significant hurdles remain. Price instability is still a major challenge, with currently 90% of Bitcoin and 96% of Ethereum holdings in profit. Although institutional products like ETFs and corporate treasuries can absorb some selling, abrupt corrections—such as the $500 billion market drop after the announcement of new U.S. tariffs—showcase ongoing systemic vulnerabilities. Additionally, entrepreneurs must contend with cybersecurity issues and global tensions, as seen in the $1.77 billion lost to crypto thefts in early 2025.

To sum up, the evolving relationship between entrepreneurial risk-taking, investor involvement, and regulatory certainty is redefining the crypto sector. As startups increasingly rely on both institutional and individual backers, the industry’s expansion will depend on striking a balance between new ideas and steady growth. For lawmakers, harmonizing with international standards like MiCAR while developing frameworks tailored to the U.S. will be essential for ensuring that crypto remains a core part of the financial landscape.

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