It's tough to keep up with the pace of institutional involvement in bitcoin right now, with Microsoft's highly anticipated shareholder vote (Dec 10) on whether to add bitcoin to its balance sheet being the tip of the iceberg.
As bitcoin continues to mature, institutional interest has surged, reshaping the landscape in ways we couldn’t have imagined a few years ago. This demand—accelerated by the advent of US-based spot Bitcoin ETFs—has moved beyond early hype into a sustained wave of participation that’s creating new dynamics in the market.
Large-scale players from hedge funds to asset managers and even pension funds are now eyeing bitcoin as a viable asset class as a function of its ability to act as a growth driver and hedge against inflation and systemic risk. And while bitcoin has seen cyclical interest before, the current momentum feels different, rooted in structural demand rather than speculative spikes.
Record ETF inflows
Data shows a surge in Bitcoin ETF demand, particularly driven by BlackRock's iShares Bitcoin Trust (IBIT), which is experiencing large capital inflows and highlighting the growing institutional interest in crypto.
Some data points:
➡ BlackRock's IBIT brought in $872 million in a single day (Oct 29) and $1.5 billion in just two days
➡ Collectively, spot Bitcoin ETFs have purchased $6 billion in just 14 trading days to the end of October.
➡ IBIT took in more by value on a single day (Oct 30) than all but seven of the 590+ ETFs launched in 2024 have taken in for the entire year As noted by Nate Geracci of the ETF Institute
➡ Collectively, spot Bitcoin ETFs have now amassed 1,000,000BTC since their launch in January
➡ Aggregate AUM for spot Bitcoin ETFs now stands at $72.1 billion (as of Oct 31)
➡ European investors continue to buy into US BTC ETFs, with flows of over $105 billion YTD
The above are staggering numbers even when accounting for early capital rotation from other bitcoin vehicles. Additionally, while there is no shortage of bullish factors currently at play, among them the US elections, government deficits, whale accumulation, Chinese stimulus, and rate cuts, it's interesting to observe the bullish price reversal in the context of the Bitcoin ETFs.
The recent break and sustained price action above $70K has perfectly coincided with new all-time highs in terms of aggregate market cap for Bitcoin ETFs, which hit $72.5 billion this week (Figure 4). Correlation does not equal causation but it's hard to bet against the ETF single demand source being a major driver of price dynamics as we gear up for new all-time highs.
Figure 4: Recent bitcoin break out to near all-time highs coincided with Bitcoin ETF demand surge
Another development signaling the upswing in sentiment is crypto ETF launches. Here, newcomer Canary Capital has filed for three spot ETFs in the space of a couple of weeks. The ETF issuer announced a Solana ETF filing on October 30, just weeks after filing for both a Litecoin and XRP ETF.
Remembering that the launch of new crypto ETPs was an important indicator of sentiment in the previous cycle––particularly in Europe as that was pre-US SEC approval––we could be looking at a similar setup here.
The MicroStrategy effect
Anyone paying attention will know that MicroStrategy (MSTR) is the largest institutional holder of bitcoin by quite some margin as it continues its evolution into a full-blown bitcoin company.
Driven by the weakening purchasing power of the dollar, the firm was the first to draw down US dollar cash reserves in favour of bitcoin back in December 2020––a move that TradFi decried as a crazy move at the time. As CEO Michael Saylor put it, cash on the balance sheet was "melting like an ice cube", and bitcoin counteracts this with its fixed supply and growing global demand, offering a durable alternative to preserve/grow shareholder value.
Since adopting bitcoin as its primary treasury reserve asset in 2020, MicroStrategy has outperformed every single S&P 500 company. As seen in Figure 1, MSTR has posted a staggering 1,620% return vs. 426% for bitcoin.
Figure 1: How MicroStrategy has outperformed the S&P 500 and bitcoin
But why has MSTR outperformed bitcoin itself? Through a series of convertible note offerings (investors receive the option to convert the debt into stock) they’ve been able to raise over $2 billion, using these funds to accumulate even more bitcoin and raising the firm's leveraged exposure to bitcoin. This has allowed a near 0% financing of its purchases, with the company benefiting both from BTC price appreciation and the ability to manage its debt obligations over time.
What really stands out is the scale and commitment to the plan. While other companies have experimented with small allocations, MicroStrategy has committed some 90% of its total reserves to bitcoin which reflects Saylor's view of it as a 'pristine' asset of the digital era that will weather the systemic risks that traditional fiat systems similarly to gold in the past.
Cryptofication is a global trend
While it is North American companies that generate the lion's share of the media coverage, corporate acquisitions of bitcoin is happening globally as companies recognise its strategic value to diversify treasury reserves as well as its potential for capital appreciation and new market access facilitation.
Case in point: Tokyo-listed investment firm, Metaplanet, which has been actively acquiring bitcoin since April 2024, has just announced it will adopt 'BTC' Yield as a Key Performance Indicator (KPI). They also explicitly state that they are "following industry best practice pioneered by MicroStrategy."
“Metaplanet now owns more than 1000 BTC making it one of the largest corporate holders of Bitcoin in Asia.”–Simon Gerovich, Metaplanet CEO
Metaplanet plans to report BTC yield regularly, providing updates on a quarter-to-date and year-to-date basis, with BTC yield reflecting the period-over-period percentage change in the ratio between the company's total bitcoin holdings and fully diluted shares outstanding. From July 1, 2024, to September 30, 2024, the company's BTC yield was 41.7%.
Figure 2: Metaplanet's whitepaper on its adoption of a BTC yield strategy
Of course, 'yield' in this context is a departure from the accepted TradFi norms, but more firms are following the trail blazed by MicroStrategy in a bid to shore up value for shareholders. Metaplanet now provides specific numbers related to the company's total bitcoin holdings and corresponding aggregate cost basis over specific reporting periods. For example, as of October 16, 2024, the total bitcoin holdings were 861.387 with an aggregate cost basis of 8.022 billion yen.
Emory and Endowments
In addition to corporates and financial institutions, the past week has seen another interesting development. Emory University disclosed an investment of $15.8 million in bitcoin filed with the SEC on October 25, held via the Grayscale Bitcoin Mini Trust (approx 2.7 million shares of the Grayscale trust). It marks the first endowment to publicly report exposure to bitcoin and may well influence other hitherto reluctant educational institutions to consider digital assets as a part of their diversified portfolios.
The Emery news means that every institution type is now represented in the latest Bitcoin ETF 13F filings (Figure 3).
Figure 3: The full range of institutions now with Bitcoin ETF exposure
As a private research university with a substantial endowment, Emory’s decision could have advantages beyond financial returns. The move symbolies an innovative investment approach, aligning the university with cutting-edge finance and potentially attracting future-oriented donors, students, and faculty interested in cryptocurrency and blockchain research. Indeed, the Emory news gives further weight to the familiar "the institutions are here" refrain.
Sovereign participation
Finally, we would be remiss to overlook sovereigns when examining the broader institutional adoption of bitcoin and it is well known that El Salvador has emerged as a landmark case, becoming the first country to recognize Bitcoin as legal tender in 2021. The country has worked to integrate bitcoin into its economy, developing initiatives like the Chivo Wallet to facilitate transactions and boost financial inclusion for the unbanked.
Though it's true that the latest surveys reveal bitcoin not to have been widely adopted as a medium of exchange (in line with Gresham's law), awareness of the Chivo Wallet remains high (68%) and the government’s establishment of a "Bitcoin City" project, fuelled by geothermal energy from volcanoes underscores its commitment to both bitcoin adoption and sustainable energy.
Figure 4: Awareness and use off Chivo Wallet and local business adoption of bitcoin in El Salvador
At the same time, El Salvador has recently been adding to its treasury, which now stands at nearly 6000 bitcoin, up from 2381 at the beginning of 2024. It's important to note that these purchases are happening despite the intensifying pressure from the IMF, which has warned that the volatility of bitcoin could have a potential negative impact on El Salvador's economy and financial stability. But of course, the real reason is that the IMF has tied its financial assistance to El Salvador to the country's willingness to limit its bitcoin adoption––but Nayib Bukele remains steadfast in his support for the premier digital asset regardless.
Figure 5: El Salvador's cumulative bitcoin holdings
Other countries are following suit, with Qatar rumoured to step into bitcoin via its SWF and Norway having already disclosed its SWF exposure to bitcoin earlier this year through its holdings of Coinbase, MicroStategy, and Block Inc.
While each country’s approach differs, the growing trend of sovereign interest in bitcoin in context with the examples laid out above point to a new frontier in adoption, where institutions increasingly view bitcoin not just as an asset but as a viable component of treasury finance and innovation strategy.
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