Amid expectations of soaring demand and a favorable policy environment, Bitcoin has actually been an overt disappointment this year. Yes, the largest digital currency hit a record high earlier this year while notching a roughly five-month long rally, but as of this writing Monday, the cryptocurrency traded at prices below what was seen a year ago.
A frustrating scenario to be sure because a significant portion of the 2025 Bitcoin news flow has been encouraging. Making matters worse is the October-November slide experienced by Bitcoin. Historically, those are two of the best months of the year for the cryptocurrency.
In large part, that slide was hastened by early adopters – market participants that bought Bitcoin 10+ years ago – taking profits and novice traders learning hard lessons in leverage. Those liquidations shook a bunch of retail investors out of the market. Institutional investors aren’t being shaken out. In fact, their devotion to and interest in Bitcoin is steady, if not rising.
Institutional Investors Betting on Bitcoin
As is the case with their counterparts in the wealth management community, institutional investors are embracing exchange traded funds as avenues for Bitcoin exposure.
(Image Courtesy: State Street Investment Management)
Bitcoin is the oldest and largest cryptocurrency and while those are superficial factors, those points have paved the way for broader usage and store of value cases relative to basically everything else in the cryptocurrency space. In turn, age, size, utility and the broader access afforded by ETFs have allowed more professional investors to get in the game.
“Amid a growing landscape for digital assets and their use cases—from stablecoins, to tokenization, and others—BTC remains a cornerstone of the digital asset world,” notes State Street. “Often viewed as a standard against which other crypto assets are measured, its pioneering role and substantial market capitalization make it a focal point for both new entrants and seasoned investors.”
An improving regulatory climate, including recent passage of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) and the Digital Asset Market Clarity Act, are also among the catalysts for broader bitcoin adoption among high-level professional market participants.
Bitcoin Ties to M2, Stocks Make it Approachable for Pros
Over the course of its still relatively young lifespan, bitcoin’s correlations to stocks have fluctuated. There are times, current environment included, when the digital currency is intimately tethered to stocks. Then there are periods when it functions more like an alternative asset. Either way, that’s something institutional investors can wrap their heads around, making bitcoin more approachable to them.
The same is true of the M2 measure of money supply. As noted in the State Street chart below, Bitcoin had a lengthy history of being correlated to M2 until spot ETFs came to market nearly two years ago.
However, Bitcoin’s overall correlations to traditional assets isn’t high and that makes it appealing to professional investors looking to diversify portfolios while potentially improving performance.
“BTC’s historical performance has delivered outsized returns that would have meaningfully improved portfolio efficiency if included in small doses. Its low correlation with traditional assets like equities and bonds has made it a powerful diversifier, especially in multi-asset portfolios. When BTC is added incrementally to a traditional 60/40 equity/bond mix, the Sharpe ratio improves significantly,” concludes State Street.