Crypto Investors Expand Into Traditional Markets as Convergence Accelerates

Investors who once concentrated on cryptocurrencies such as Bitcoin are widening their reach to traditional financial assets, including S&P 500 exchange-traded funds and artificial intelligence-related funds, according to an analysis.

Pu Feng, chief economist at Avenue Capital, said June 20 that Bitcoin investors who had long remained in the digital-asset ecosystem are now allocating money to S&P 500 ETFs and AI-related funds for the first time. Markets that once stood in opposition are becoming complementary, he said.

Pu added that BlackRock has described the cross-asset trend as the "great convergence." He said the financial system will develop into a more inclusive and integrated form.

Crypto investors have also recently joined investments tied to major initial public offerings such as SpaceX through pre-IPO perpetual futures and tokenized stocks. Pu said those products are blurring the boundary between public and private markets by allowing investors to invest in pre-listing valuations. Trading volume in pre-IPO perpetual futures has surged from about $1 billion in early May to roughly $22 billion recently, he added.