Key Takeaways:
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Spot Bitcoin ETFs have outpaced gold ETFs in initial growth, with expectations of $100 billion in annual inflows by 2027.
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Publicly traded companies and nations possess nearly 1.7 million BTC, indicating a robust long-term outlook.
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Bitwise forecasts Bitcoin inflows to reach $120 billion by 2025 and climb to $300 billion by 2026.
The demand for Bitcoin (BTC) is on the rise among a variety of investors, including publicly traded companies amassing Bitcoin treasuries, sovereign wealth funds, exchange-traded funds (ETFs), and nation-states. This demand is projected to lead to significant capital influx into Bitcoin over the next few years. Bitwise, a crypto index fund management firm, estimates that inflows could hit $120 billion by the end of 2025, with an additional $300 billion anticipated for 2026.
According to Bitwise’s recent report, titled “Forecasting Institutional Flows to Bitcoin in 2025/2026,” US spot Bitcoin ETFs achieved $36.2 billion in net inflows in 2024, exceeding the early success of gold ETFs like SPDR Gold Shares (GLD). Bitcoin ETFs amassed $125 billion in assets under management within just a year—a rate 20 times faster than GLD—and may potentially triple their inflows to reach $100 billion annually by 2027.
Despite these gains, $35 billion in potential Bitcoin demand remained untapped in 2024 due to risk-averse compliance policies from major corporations such as Morgan Stanley and Goldman Sachs, managing client assets totaling $60 trillion. These firms require extensive multi-year performance records, but the growing acceptance of Bitcoin ETFs is expected to unlock this capital.
Jurrien Timmer, Fidelity’s Director of Global Macro, noted that Bitcoin trading above $100,000 suggests its potential to replace gold as a store of value. He also highlighted that recent trends show a convergence of the Sharpe ratios for both Bitcoin and gold, indicating that their risk-adjusted returns are becoming increasingly similar.
The Bull, Bear, and Base Scenarios for BTC Wealth Allocation
Apart from ETFs and wealth management firms, Bitcoin’s status as a reserve asset is gaining traction among public and private companies, along with sovereign nations. Companies currently hold around 1,146,128 BTC, valued at $125 billion, which represents 5.8% of Bitcoin’s total supply. Sovereign nations collectively hold 529,705 BTC, worth approximately $57.8 billion, with the United States, China, and the United Kingdom leading in holdings.
Bitwise’s senior investment strategist and research team forecast a continuation of Bitcoin wealth allocation, presenting potential bear, base, and bull cases. In the bear case, a mere 1% of nation-states reallocating from gold to Bitcoin could result in inflows of $32.3 billion. Conversely, in the base scenario projecting a 5% reallocation, inflows could reach $161.7 billion. The bull case, envisioning a 10% shift, could see inflows exceed $323.4 billion, demonstrating an increasing institutional and governmental interest in Bitcoin as a hedge against inflation and currency devaluation.
Note: This article is not intended as investment advice. All investments carry risk, and readers should conduct their own research before making any decisions.
