In 2024, institutional investors have shown a strong interest in Bitcoin, acquiring a significant amount of the cryptocurrency. This surge in demand can be attributed to the emergence of spot exchange-traded funds (ETFs) and the purchases made by public companies like MicroStrategy.
The rise of Bitcoin ETFs has been remarkable, with these funds collectively accumulating a large number of Bitcoins. BlackRock's spot Bitcoin ETF, known as IBIT, holds the largest assets under management. The first 239 trading days of these ETFs saw impressive net inflows, surpassing the performance of gold ETFs. By the end of the year, Bitcoin ETFs in the US had surpassed gold ETFs in terms of assets under management.
Publicly listed companies have also played a significant role in driving Bitcoin demand, with MicroStrategy being particularly aggressive in acquiring the cryptocurrency. The influx of institutional capital has helped mitigate selling pressure in the market.
Additionally, there is growing interest among lawmakers for the establishment of a "Bitcoin Strategic Reserve" as a hedge against inflation. Countries like Bhutan and El Salvador have already incorporated Bitcoin into their treasuries, setting an example for others. Discussions surrounding a Bitcoin reserve have also emerged in Brazil and Switzerland.
As regulatory clarity improves and more funds view Bitcoin as a portfolio diversifier, institutional allocations are expected to increase. The convergence of institutional demand, public company acquisitions, and legislative interest bodes well for Bitcoin's future growth and its role as a key asset in diversified portfolios.