Institutional Bid for Bitcoin

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In 2024, traditional finance institutions finally gained direct access to Bitcoin via approved spot Bitcoin exchange traded funds (ETFs). Over the year, Blackrock acquired $56B worth of Bitcoin, or 557K BTC, on behalf of their clients, while Fidelity bought more than $20B worth, or 346K BTC, as well.

The distinction of these financial products being "spot" ETFs is critical to understanding their market impact. Unlike futures-based ETFs, which track the price of Bitcoin through derivative contracts, spot ETFs require the issuer to hold the actual digital asset to back their shares. This means that every dollar flowing into these funds translates directly into buying pressure on the underlying supply, removing coins from circulation and tightening the available market inventory.

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Michael Saylor’s Microstrategy continued their purchases through 2024, buying up $24B worth of Bitcoin in the year alone. Their purchases originally began in August 2020, with an initial purchase of 21K BTC, or $250M worth at the time.

MicroStrategy’s accumulation represents a unique corporate treasury strategy known as a "Bitcoin Standard." Rather than keeping excess cash reserves in fiat currency, which is subject to inflationary debasement, the company converts its treasury into Bitcoin. This approach treats the asset not just as a speculative investment, but as a pristine reserve asset designed to preserve purchasing power over a multi-year horizon.

Beyond institutional Bitcoin, institutions were also finally able to offer Ethereum spot ETFs to their clients, with BlackRock alone holding just over $3.62B worth in ETH in their custody.