Traditional finance institutions are gradually shifting their trust toward DeFi ecosystems, which is reshaping how investors evaluate digital assets. According to recent institutional research, this institutional adoption wave is favoring Ethereum over Bitcoin as the primary settlement and smart contract layer.

The dominance of DeFi on Ethereum is driving this preference. With the bulk of decentralized finance activities—lending protocols, DEX volume, and tokenized derivatives—concentrated on the network, major financial institutions see Ethereum as the core infrastructure for Web3 financial services. This contrasts with Bitcoin's more limited use case in the current institutional framework.

What makes this shift significant is that traditional finance decision-makers are now weighing crypto assets not just on store-of-value narratives, but on functional utility within decentralized systems. As DeFi matures and compliance improves, this trend could continue reinforcing Ethereum's institutional adoption trajectory.