On November 5, the United States re-elected Trump as president. As a politician who supports cryptocurrencies, Trump promised to reduce regulations and accelerate the growth of Bitcoin, after which the price of Bitcoin hit a new all-time high of $89,915 (November 12).
Bitcoin (BTC) has surged 114% year-to-date, and the data sends a clear message: institutions that once ignored Bitcoin and missed such a big opportunity may begin to FOMO and start to enter the market. The question is no longer whether Bitcoin belongs in institutional portfolios, but: Can you afford not to include it? From regulatory breakthroughs and ETF approvals to Bitcoin's evolving infrastructure, the story has changed. Institutional FOMO may be the main driving force behind BTC's next round of gains.
From illegal to institutionalized: a seal of regulatory approval
One of the main reasons why institutions shunned Bitcoin was its lack of legitimacy. However, the recent regulatory approval of a Bitcoin ETF has fundamentally changed this view. Institutional interest in Bitcoin is also clearly increasing, with BlackRock's iShares Bitcoin Trust (IBIT) maintaining its No. 1 position in inflows among its company's new products.
Outside the United States, the global digital asset ETF market is expanding. Products in regions such as Hong Kong, Australia, Canada and Europe have been launched and mature, allowing Bitcoin to gain a foothold in the global regulated market. Each ETF provides a framework to elevate Bitcoin from a speculative asset to a recognized asset class.
Refuting the Argument from Intrinsic Value
For years, Bitcoin's critics have claimed that it lacks intrinsic value. In recent years, the blockchain industry's heavy investment in research and educational resources has gradually led institutions to accept the evolving role of the asset. Various publications, think tanks, and educational centers are deepening people's understanding of Bitcoin's potential. More and more institutions have accepted BTC's characteristics as "digital gold" and have begun to use it to hedge against inflation and traditional market fluctuations. The on-chain transparency of blockchain is also an advantage that other traditional Wall Street assets cannot achieve. For institutions, this feature makes every transaction visible and traceable, providing a level of transparency that many traditional assets do not have.
Digital gold and the new frontier of payments
Bitcoin’s role in the financial ecosystem has expanded far beyond a purely speculative asset. With advances in Bitcoin infrastructure, including Layer 2 solutions and the Lightning Network, Bitcoin has been enhanced in both store of value and medium of exchange.
In addition, two important developments in the Bitcoin ecosystem in 2024: BTCFi and the inscription/rune trend, both highlight the expanding usefulness of Bitcoin. In particular, BTCFi represents a new class of financial products built around Bitcoin, linking DeFi functionality directly on BTC. It unlocks the ability to issue homogeneous and non-homogeneous assets on the Bitcoin network, which can be transferred using the Bitcoin mainnet or its Layer-2 solution. This wider availability supports the appeal of Bitcoin as an innovative asset with real-world applications that is in line with retail and institutional interests.
Volatility Problem? How Bitcoin Compares to Tech Stocks and Traditional Assets
Bitcoin’s volatility problem remains, but recent data paints a more nuanced picture. When Bitcoin’s volatility and returns are compared to those of technology stocks, Bitcoin is more stable than popular perception suggests.
Bitcoin’s Sharpe Ratio vs. Traditional Assets (5-year Time Frame)
The comparison chart of Bitcoin's price performance with traditional assets shows that as Bitcoin gradually becomes a financial instrument, its volatility level seems more attractive. In addition, its risk-adjusted returns (measured by the Sharpe ratio) generally outperform traditional assets. In the current market environment, macroeconomic challenges and geopolitical uncertainties make it increasingly difficult to find assets with such potential returns.
Bitcoin’s price volatility is increasingly being understood as an opportunity rather than a drawback, providing portfolio diversification opportunities that traditional assets cannot match.
Accessibility to Institutional Investors: A Growing Market Access Gateway
The excuse that institutional investment in Bitcoin is difficult no longer exists.
First, institutions can now hold Bitcoin directly using institutional custody solutions, with companies such as Coinbase Custody and Fidelity Digital Assets significantly expanding their institutional custody operations to provide secure storage options that are more efficient and aligned with institutional needs. These custody services comply with regulatory standards and reduce institutions' concerns about the risks of digital asset storage.
Second, institutions can invest through BTC derivatives. The Bitcoin futures market is now fully institutionalized. CME's Bitcoin futures open interest just hit its all-time high of $14.6 billion this week. Institutional investors now have ample tools to hedge or speculate in a regulated environment, and long and short products also provide flexibility in investment strategies.
Third, institutions can invest through ETFs. Spot ETFs have been approved in the U.S., Hong Kong, Canada, Australia and European markets, providing a simplified and regulated channel that can meet the needs of everyone from large institutional asset management institutions to direct-to-consumer investment platforms.
Reassessing the Institutional Stance: Can You Still Confidently Reject Bitcoin?
Institutional portfolios have long shunned Bitcoin due to concerns about legitimacy, intrinsic value, accessibility, and volatility. But these arguments have been systematically addressed. ETFs have institutionalized Bitcoin; research and education have expanded its recognized value; custody solutions and financial products have increased its accessibility; and comparative data has demonstrated its viability as a high-return asset.
The ultimate question is: Do the old reasons for institutions to reject Bitcoin still work? Now is the watershed moment for institutions to enter the market. The institutions that enter the market now will be the main driving force for the next round of Bitcoin's rise. For institutions that still hold opposing views, they will sit on the sidelines and miss this round of opportunities to get on board.
Bitcoin's journey from marginal asset to institutional investment destination has been a journey of rapid growth, robust infrastructure, and increasing adoption. As major sovereign funds, pension plans, big banks, and institutional investors consider their next steps, ignoring Bitcoin may no longer be an option. The moment of institutional FOMO has arrived: accept this change or risk being left behind by the market.
Institutional FOMO: The driving force behind the next round of Bitcoin rally?
As Bitcoin’s legitimacy, infrastructure, and market access develop, increasing institutional interest has led to a phenomenon similar to FOMO. When institutions enter the market, they usually do so in a sizable way, which can drive Bitcoin prices higher.
Bitcoin's halving cycle has historically been associated with price increases, and a potential rally could push Bitcoin prices above $100,000, expected to be reached by the end of the year. With the new administrative policy taking effect in January, further regulatory clarity could catalyze more sovereign funds, pension insurance, large banks and institutional investors to participate.
