Summary Bitcoin's unprecedented institutional adoption in 2024, highlighted by the record-breaking launch of the iShares Bitcoin Trust ETF, signals a bullish outlook for 2025. Companies like Metaplanet and MicroStrategy adopting the Bitcoin standard have seen phenomenal stock performance, indicating growing corporate recognition of Bitcoin as a reserve asset. The rise of Bitcoin-backed financial products, including ETFs and convertible bonds, is integrating Bitcoin deeper into global financial systems, lowering capital costs for Bitcoin companies. The emergence of new ETFs, like Bitwise’s Bitcoin Standard Index, will drive capital inflows, further solidifying Bitcoin's role in mainstream finance. Bitcoin experienced unprecedented institutional adoption in 2024. The evidence suggests that 2025 will likely be extremely bullish. Key developments include the record-breaking launch of the iShares Bitcoin Trust ETF ( IBIT ), the remarkable performance of companies like Metaplanet and MicroStrategy ( MSTR ) adopting the Bitcoin standard, and the surpassing of gold ETFs by Bitcoin ETFs in AUM. These milestones indicate a significant shift in institutional sentiment towards Bitcoin ( BTC-USD ), with all indications pointing towards this being only the beginning. The IBIT ETF: The Most Successful ETF Launch in History The iShares Bitcoin Trust ETF ((IBIT)), launched by BlackRock in January 2024, achieved unprecedented success, attracting over $37 billion in inflows within its first year. This remarkable achievement positions IBIT as the most successful ETF launch in history, surpassing previous records. The rapid accumulation of AUM reflects a growing institutional appetite for regulated BTC exposure. When we plot the respective AUMs of BlackRock's gold ETF ( IAU ) against its BTC ETF across time, the results look like this: IBIT vs IAU (CryptoQuant) As you can see, in the very first year of existence, IBIT already has nearly twice as much AUM as what IAU has ever had in 2 decades of existence. Perhaps you are not convinced because BlackRock's CEO Larry Fink is very bullish on BTC and has been talking it up a lot. Perhaps that is why BlackRock's gold ETF AUM isn't doing as well as their BTC ETF AUM. Here is another chart , this time referring to all BTC ETF AUM vs all gold ETF AUM. It seems this is a wider issue than BlackRock. Bitcoin ETFs vs Others (K33 Research) Metaplanet's Phenomenal 2024, Bitcoin as a Corporate Standard Metaplanet, a Japanese publicly traded company, emerged as the best-performing stock globally in 2024 , with its stock price soaring over 2,450%. This meteoric rise is attributed to Metaplanet's strategic adoption of the Bitcoin standard, incorporating significant Bitcoin holdings into its corporate treasury. By the end of 2024, Metaplanet had accumulated 1,761 BTC . Top performing stocks in 2024 (Bloomberg) If you look at this Bloomberg Terminal output, which are the top 20 best performing equities worldwide in 2024, you will notice KULR and MSTR. Both are companies that have been buying BTC. Thus, 3 of the top 20 best performing equities in the world are companies on the Bitcoin standard. Numbers 1 and 2 are both on the Bitcoin standard. And the only other Bitcoin company in the top 20, MSTR, also happens to be the 2nd biggest company by market cap on this list. The only other common thread between any other three companies on here is a relation to quantum computing (I see QUBT, RGTI, and QBTS). So it seems that if you picked well in the quantum computing sector, you could have had 1000% alpha in 2024. And if you picked well on the Bitcoin sector, you could also have had 1000% alpha in 2024. If you picked well in REITs or some other dividend stocks, maybe you beat the S&P 500, but you probably didn't beat BTC, which means your portfolio actually lost value when measured in BTC terms. This trend underscores the growing recognition of Bitcoin as a viable reserve asset, with companies seeking to hedge against fiat currency depreciation and diversify their holdings. The success of these companies may encourage broader corporate adoption of Bitcoin, further integrating it into the global financial ecosystem. The Rise of Bitcoin-Backed Financial Products The capital markets witnessed the rapid growth of Bitcoin-backed products in 2024, including spot ETFs and Bitcoin-backed convertible bonds. Many aren't too aware of the latter, so here is a chart to catch you up to speed. The Bitcoin backed bonds issued by MSTR are some of the best performing securities on the planet. MSTR Converts (MicroStrategy) Now, for a very long time, the use of these bonds were for convertible bond arbitrageurs. Such traders bought the bonds for the cheap embedded call option and then used delta hedging to arbitrage the low implied volatility of the option with the high realized volatility of the stock. A nuanced explanation of volatility arbitrage starts at 8:48 of this video . However, when a basket of your blended convertibles is capable of beating Bitcoin, which has beat the S&P 500 by around 100% total return in 2024 and far more than that in previous years, other kinds of market participants start to pay attention. In fact, these people know that they would really be better off just holding the bonds to maturity without having to bother about the gamma and vanna in an illiquid multi-year call option. Unfortunately, there is no way for retail to get direct exposure to such securities. Where there is demand in the market, supply rises to meet it. Here is Vivek Ramaswamy's Strive Asset Management filing for the Strive Bitcoin Bond ETF . The ETF will hold the convertible bonds and fixed income securities of MSTR. MSTR is the only company mentioned directly, but based on the name of the ETF and the wording of the filing, it is basically guaranteed that they aim to be an investable benchmark for all bonds of Bitcoin companies that are participating in the fixed income markets. Many are starting to follow MSTR's lead. They are using the convertibles to buy BTC to increase BTC per share. Strive isn't the only one. Here is the filing for the REX Bitcoin Corporate Treasury Convertible Bond ETF , which basically aims to do the same thing. Please understand what is happening. Bitcoin is being pushed into various crevices of the global financial system that most people would not have conceived just 2 years ago. The fixed income markets are now receiving an inflow of capital and activity thanks to Bitcoin. As these ETFs become approved and the capital starts to flow in, the bid on debt will become more price insensitive. This will lower the cost of capital for Bitcoin companies buying BTC, and it will only accelerate the rate of BTC purchases and the rate of new companies joining in on this strategy. The end result will be a permanent and growing price insensitive bid on BTC, which will push the price much higher. The fact that these ETF filings are popping up is just a signal of all the capital markets demand for these BTC linked securities. (I believe the pure play way to gain exposure to this seismic shift in global finance is to invest in Bitcoin's most well capitalized investment bank: MSTR. Most people view MSTR as a simple Bitcoin holding company combined with a laggard software business. In my opinion, this view could not be more wrong. MSTR is the vehicle through which BTC is repackaged into securities of various risk and return profiles for the use of various investors. MSTR common stock happens to be the equity exposure to this innovative operation which can, in my opinion and for lack of a better term, only be described as serving as Bitcoin's personal investment bank .) A New Index Fund By Bitwise: The Bitcoin Economy's S&P 500 Is Emerging There is one more ETF filing to look at. Here is the Bitwise Bitcoin Standard Corporations ETF , which invests in companies that hold over 1000 BTC. Here is the summary from the filing: The Index seeks to provide exposure to the performance of corporations that have adopted the "bitcoin standard." Such corporations are those that hold bitcoin as a corporate treasury asset. In order to be eligible for inclusion in the Index, a company must hold at least 1,000 bitcoin in its corporate treasury. The Index Provider relies upon quarterly and annual corporate reports to identify such eligible companies. Once identified, the Index Provider removes from consideration all companies without: (i) a market capitalization of at least $100 million; (ii) a minimum average daily liquidity of at least $1 million; and (iii) a public free float of less than 10%. The Index selects for inclusion each eligible security that complies with the size, liquidity and free float requirements. Each security selected for inclusion is then assigned weight based upon the market value of its bitcoin holdings, subject to certain diversification requirements, including that single constituents are capped at a maximum weight of 25% at each Index rebalance, with any excess weight being reallocated to other constituents on an equal-weighted basis. Once launched, this ETF will become a price insensitive buyer of equities that hold BTC, which drives down the cost of equity capital for Bitcoin companies. The more AUM the ETF absorbs, the more the cost of equity capital will be decreased across the board for all the companies. I believe this ETF will be quite successful depending on how it is managed over time. I hope the Bitwise team will also prioritize companies that are actively growing their BTC treasury, although this is partly achieved via weighing the index components based on the size of their BTC treasuries. The immediate impact of having a 1000 BTC threshold is simple. All public companies with over $100 million market cap sitting on 1000 BTC worth of cash can now get another marginal buyer of their equity, if they just turn that cash into BTC. The larger the AUM in this ETF, the larger this marginal capital inflow becomes. While it is impossible to estimate the specific point today, there absolutely will exist an AUM threshold for this ETF such that, for any public company, simply buying 1000 BTC to qualify for the Bitwise Index and receive the subsequent capital inflow would be a fully risk-free move for the company. For instance, consider if the marginal capital which will move into a company's stock was greater than the cost of 1000 BTC. In that case, the company should issue stock to purchase exactly 1000 BTC. The Bitwise ETF would basically buy the entire issuance of stock and more, effectively giving the company 1000 BTC for free. Because of the success of Bitcoin treasury companies' performances and the unprecedented success of the Bitcoin spot ETFs, I predict this ETF or something like it will see massive inflows once launched. The AUM will be another incentive for more companies to start buying BTC. I only really have one thing to say about the fact that many companies are starting to actively buy BTC and that there will soon be index funds which track a basket of these companies- Bitwise's index is likely the start of a wave of institutional investor interest in equities that are growing BTC per share. I have been talking about BTC per share for nearly a year in my articles. But only now are we seeing the emergence of systemic recognition of BTC adoption as an actual feature for a company's investability. We are likely seeing the emergence of the Bitcoin Standard's S&P 500. This is a global equity index which encompasses all companies of significance which operate on a Bitcoin Standard. The fact that 1000 BTC is the bar to get in means that, conservatively speaking, only another 1000 companies can ever be added. If even another 500 public companies tried to buy 1000 BTC each, the front-running plus absolute scarcity of BTC would push the BTC price far out of reach for most companies to acquire 1000 BTC. Risks A sharp and sustained price drop in Bitcoin could have far-reaching consequences, particularly for institutional sentiment. If Bitcoin were to experience a major correction, it could lead to diminished interest among both retail and institutional investors, potentially halting the momentum of adoption seen in 2024. One key area of vulnerability lies in companies that have embraced Bitcoin as a treasury asset, namely MicroStrategy. MicroStrategy has become synonymous with corporate BTC adoption, and its performance is closely tied to BTC's price. Should BTC plummet or if MSTR were to face financial difficulties-be it through mismanagement, regulatory scrutiny, or other operational issues-it could severely impact sentiment around Bitcoin treasury strategies. Investors and corporations considering adopting the Bitcoin standard might be deterred, fearing similar risks. Moreover, a collapse of a high-profile Bitcoin-focused company like MSTR could create ripple effects across the broader financial market. It would likely cast doubt on the viability of holding BTC on corporate balance sheets and reinforce the perception of BTC as a speculative asset rather than a good long term reserve option. This would not only slow the adoption of Bitcoin-backed products but also weaken the narrative of BTC as a legitimate financial instrument for institutional portfolios. Personally, I believe these risks to be quite remote. MSTR really isn't as leveraged as people make it out to be. They will not be exposed to margin calls or even solvency issues even if BTC falls 50% from here. US Strategic Bitcoin Reserve And Nation-State Adoption, Price Target, Trade Plan This is something that is on the table, which many in the Bitcoin community are talking about. I don't like speculating on this, and I think there isn't a lot to be said besides the oft-repeated talking points. For brevity and thoroughness, they kind of all sound like this: Nation state adoption is a prisoners' dilemma and Nash equilibrium, which is inevitable. For example, other countries might see this and front run the US, which will force the US to do it Trump promised it while campaigning Trump's family has launched their own crypto token And of course, you have Michael Saylor's controversial suggestion for the US to dump all its gold reserves to hurt the BRICS coalition (which has been buying a lot of gold) while capitalizing the dollar on BTC that it bought with the gold it sold. This would instantly monetize BTC, pushing it to perhaps billions of dollars per coin, while destroying the reserves of the US' geopolitical rivals. Yes, this is a very feisty suggestion. I will just note that the popular prediction market, Polymarket, has the odds of Trump starting a Bitcoin reserve in the first 100 days at 26%. This market has been around for a while, and it oscillates between 50% and 25%. Trump (Polymarket) To me, this is a market signal for skepticism about any meaningful Bitcoin reserve. If I had to guess, I would guess that those who are expecting Trump to promptly issue an order to build this reserve would be disappointed for at least some time. My hedge against this happening is that I own far OTM LEAPS calls on IBIT and MSTR. If the United States truly started buying BTC, then $1 million per BTC is very possible, in short order such LEAPS calls will yield astronomical returns. Without this kind of exogenous event, I still have my price target for BTC at $175,000 before 2026. I first gave this price target in the February 2024 article: Bitcoin Revisited: Yes, Still Buying Hand Over Fist , which was an update from my September 2023 article: Bitcoin: Why I'm Buying 14-Year-Old Tulips With Both Hands . My plan, which I had outlined in the Still Buying Hand Over Fist article, is that I will start hedging my BTC position with bear put spreads after it breaches $150,000. This is fairly straightforward now that IBIT options exist. At the time of writing that article, they did not exist, but I also predicted that they would be launched within a year and in due time. When IBIT options were first approved in September 2023, I published this article covering its significant implications . Conclusion The developments of 2024 have marked a transformative period for Bitcoin, characterized by unprecedented institutional adoption and integration into traditional financial systems. The record-breaking success of IBIT and the other Bitcoin ETFs, the exemplary performance of companies like Metaplanet and MicroStrategy, and the surpassing of gold ETFs by Bitcoin ETFs in AUM underscore Bitcoin's evolving role as a mainstream asset. In 2025, the confluence of these factors suggests that Bitcoin is entering a new era, with the potential for significant growth and accelerating institutional integration. Investors and market participants should closely monitor these trends. BTC is a Buy.
