You probably didn't notice it, but something important happened in your investment account, your pension fund, or your endowment last year. If you manage money, or if someone manages money on your behalf, there's a decent chance Bitcoin is now part of your portfolio. Not because you decided to buy it yourself. Because the institutions that control trillions of dollars of capital have quietly decided Bitcoin belongs in a diversified portfolio.
Key Takeaways
- Institutions moved from Bitcoin skeptics to major allocators via ETFs, custody, and proven returns.
- Corporate treasuries hit 200+ firms holding 5–6% of BTC supply, a global shift beyond the U.S.
- BTCFi gained traction: staking, L2s, and institutional collateral tools like CBTC emerged.
- Volatility dropped to tech-stock levels; short-term equity links, but long-term diversification holds.
- Quantum risks threaten 25–33% of BTC in legacy formats, including Satoshi-era coins.
Bitcoin: Where We Were, Where We Are Now
For fifteen years, institutions avoided Bitcoin. The reasons varied - genuine confusion about the technology, skepticism about its use case, or quiet concern that a censorship-resistant currency threatened existing business models.
In 2011, when Bitcoin reached one dollar, someone declared it dead. Bitcoin was mostly used by technical enthusiasts, few merchants accepted it, and volatility was extreme. By 2013, "Bitcoin is dead" had become a running joke. By 2017, when Bitcoin's price hit $20,000, the skepticism didn't stop. It accelerated. Paul Krugman, the Nobel Prize winner, said Bitcoin had no plausible future. Jamie Dimon, JPMorgan's CEO, called it a fraud. Warren Buffett called it "rat poison squared”.
Over 467 times (at date of writing), respected people with reputations declared Bitcoin would collapse. Each time Bitcoin survived a price crash or a scandal, the predictions would restart. Mount Gox lost 850,000 Bitcoin in a hack. Bitcoin would die. Bitcoin's block size debate nearly split the community. Bitcoin would die. Governments talked about banning it. Bitcoin would die.
It never did. But then something changed. Not overnight - gradually.
You're not reading this because Bitcoin went up in price. You're reading this because the largest capital allocators on the planet made a coordinated decision: Bitcoin works as a financial asset.
This happened in less than two years. In 2024, the SEC approved spot Bitcoin ETFs, making them the fastest-growing ETF category in history. Government reserves expanded. Pension funds began allocating. Corporate treasuries started accumulating. The shift was so quiet that most people didn't notice it was happening.
This isn't speculation anymore. Harvard's endowment holds $116.7 million in Bitcoin ETF. The UK's pension funds are posting 56% annual returns on 3% Bitcoin allocations, beating gold, bonds, and stocks. Your state pension might already own Bitcoin through an ETF you've never heard of. The U.S. government holds nearly 325,000 Bitcoin because law enforcement seized it from criminals, and the government decided to hold it as a strategic asset.
So what changed? Not Bitcoin. Bitcoin's code hasn't fundamentally altered since 2009. Its supply cap remains 21 million coins. Its network keeps running exactly as it did on day one. What changed is that institutions finally understood what they were looking at.
The people who spent fifteen years saying Bitcoin would fail were now the ones accumulating it. This isn't vindication in the sense of "Bitcoin won and everyone else lost." It's vindication in the sense of "the thing that seemed impossible turned out to be real."
You were there for the ridicule. You're living through the recognition. Most people still haven't noticed it happened.
How Institutions Are Driving the Bitcoin Market Right Now
The Three Barriers That Had to Fall
The first barrier was regulatory uncertainty and hostility. Before 2024, there was no clear regulatory framework for Bitcoin. The SEC had no defined rules, it pursued enforcement actions instead, using court cases to establish boundaries. Banks were barred from offering custody services. Tax treatment remained unclear. The message to institutions was simple: stay away.
Then in January 2024, the SEC approved spot Bitcoin ETFs and removed the crypto balance sheet requirement (SAB 121), creating the first official regulatory pathway and opening the door for banks to offer custody. Suddenly, the legal path opened.
The second barrier was operational. Bitcoin lives on a decentralized network, secured by private cryptographic keys. Traditional asset managers had no experience managing these keys. They didn't have the infrastructure. They weren't comfortable with the risk.
Then the infrastructure arrived. Fidelity Digital Assets, founded in 2018 and launched in 2019, became the first institutional-grade custody solution. Coinbase Custody launched in July 2018, and Coinbase Prime officially launched to all institutions in September 2021. Bank of New York Mellon, the oldest bank in the United States, in 2022 announced the launch of a Digital Asset Custody platform. Suddenly, institutions could hold Bitcoin the same way they hold any other asset - through a professional custodian.
The third barrier was psychological. Institutional investors needed proofs. Did Bitcoin actually improve returns? Or was it hype for retail speculators? The skepticism was legitimate. Bitcoin was young. It had crashed multiple times. Why would funds risk fiduciary responsibility for an experiment?
Then 2024 and 2025 answered the question. JPMorgan's CEO, who had called Bitcoin a fraud eight years earlier, admitted he was wrong, acknowledging that Bitcoin is "real". JPMorgan's analysts revised their cryptocurrency forecasts upward for 2026 and beyond. When the world's largest asset manager flipped, institutional investors paid attention. The numbers were clear. The psychology shifted. Once these three barriers fell, capital moved.
What Changed in the Market Itself
When retail traders dominated Bitcoin, the market was chaotic. Price swings were extreme. Bitcoin moved constantly between exchanges and wallets.
Institutions don't trade Bitcoin the way retail traders do. Institutions don't sell quickly. When an institutiona allocates millions in Bitcoin, that Bitcoin goes into cold storage and stays there for decades. This changed Bitcoin's scarcity dynamic completely. Remove enough Bitcoin from the trading supply, and price dynamics shift. You need higher prices to move the same volume of trading.
In 2025, this dynamic played out visibly. Bitcoin surged to a record high of $126,000 in early October, driven by accelerating adoption among corporate treasuries. By year-end, Bitcoin's market capitalization sat near $1.8 trillion, making it one of the world's ten most valuable assets, comparable to large technology companies.
Bitcoin also changed how it moved relative to traditional markets. In 2024, Bitcoin's correlation with the S&P 500 was 0.27, meaning it moved independently most of the time. In 2025, that correlation jumped to 0.43. during market shocks, the April tariff panic, and the October rate scare, Bitcoin's correlation with equities spiked to 0.6. This happened because the new institutional capital treating Bitcoin like a risk asset moved it in sync with stock volatility. At the same time, Bitcoin's correlation with gold (the traditional safe-haven asset) remained low and unpredictable.
This created a new reality: Bitcoin now responds to macro shocks the way equities do, but over longer periods, weeks and months, it still behaves as a distinct asset. It decouples. It trades on its own. This is important. It means Bitcoin can provide portfolio diversification, but only if you hold long enough to survive the short-term correlation spikes.
The final signal came from volatility itself. Bitcoin's volatility compressed to the 35-40% range by year-end - roughly equivalent to high-growth technology stocks. A decade ago, Bitcoin's volatility was five times higher. This compression reflects something fundamental: a deeper pool of capital, more stable holders, and institutional participants who buy and hold rather than panic-sell.
Institutional BTC Holdings Are Growing
By the end of 2025, the numbers told a clear story: institutions had committed to Bitcoin at scale. U.S. spot Bitcoin ETFs attracted $21.3 billion in net inflows during the year. That's substantial, and it happened despite November and December weakness when market sentiment turned risk-averse. The fact that capital kept flowing even when markets were uncertain suggests something real: this isn't momentum-driven retail speculation. It's institutional capital treating Bitcoin like any other asset class.
The growth in corporate Bitcoin treasuries was even more impressive. At the start of 2025, roughly 80-85 publicly listed companies held Bitcoin. By year-end, that number had grown to 194 companies collectively holding approximately 1.1 million Bitcoin, 5.5% of the entire Bitcoin supply, worth roughly $100 billion. This single year saw more corporate adoption than most forecasters expected to happen through 2026.
MicroStrategy, rebranded as Strategy, led this charge. The company ended 2025 with 672,500 Bitcoin, representing 3.4% of all Bitcoin in existence. In a single year, Strategy added 226,100 Bitcoin to its balance sheet. But Strategy wasn't the only player, over 190 other public companies disclosed new Bitcoin holdings in 2025, collectively accumulating over 268,000 Bitcoin across multiple sectors and geographies.
The headline data shows the U.S. dominates. But the real story is global. According to the Corporate Bitcoin Adoption 2026 Report, Japan and China combined represent approximately 50% of all corporate Bitcoin holdings, excluding U.S. companies. This isn't a U.S. phenomenon. It's a global one.
The report notes that "more jurisdictions gained first-time corporate adopters" in 2025. Corporations across different time zones, regulated differently, with different market access, all decided Bitcoin belonged on their balance sheets. The convergence happened without centralized coordination.
The accumulation of Bitcoin by public companies remains a structural driver of institutional adoption. These companies exist, manage Bitcoin on their balance sheets, and attract capital from traditional investors - a concrete shift in how Bitcoin is perceived.
BTCFi: When Bitcoin Stops Being Just a Store of Value
For the first time, institutions have access to simple Bitcoin exposure through ETFs and custody. This matters. It's the foundation. But it also raises a question: what comes next?
The answer is emerging in BTCFi - Bitcoin Finance. The idea that Bitcoin doesn't have to be purely a store of value. Early BTCFi was dominated by yield-chasing strategies. Now the focus moved toward more fundamental use cases: Bitcoin as collateral, Bitcoin as economic security, Bitcoin as a settlement layer for other networks.
Babylon's launch of Bitcoin staking marked this shift - a framework for using BTC to secure external systems without changing Bitcoin itself. Babylon's staking protocol, already live, has activated more than 58,000 BTC in staking, worth nearly $5 billion, with 60+ active finality providers securing the network. But the real breakthrough came with the launch of Trustless Vaults - a cryptographic mechanism that allows native Bitcoin to serve as collateral for DeFi applications without ever leaving the Bitcoin network or being wrapped.
But Bitcoin's institutional presence extends beyond staking. In August 2025, a new form of Bitcoin emerged on institutional settlement networks: CBTC, a 1:1 wrapped Bitcoin built by BitSafe for use on the Canton Network blockchain designed for financial institutions. CBTC allows Bitcoin to function as institutional collateral in ways that native Bitcoin cannot, enabling derivatives margin, collateralized lending, and 24/7 settlement flows, all while maintaining institutional privacy.
In 2025, Bitcoin's Layer 2 networks made meaningful progress. Stacks, the largest Bitcoin L2, removed its sBTC supply cap in September 2025 - a transition from testing mode to open production. This matters because it removes an artificial constraint and opens Bitcoin-backed assets to genuine liquidity experimentation. Simultaneously, BitVM projects like Bitlayer demonstrated a new technical direction: Bitcoin-anchored execution layers that use fraud-proof frameworks to extend Bitcoin's functionality without altering the base protocol itself. These aren't hacks. They're architectural innovations that solve real problems.
Most Bitcoin will remain in core holding strategies for the foreseeable future, that's appropriate risk management. But as Babylon's vaults prove themselves, as Layer 2s establish winners, as custody solutions integrate these products into institutional frameworks, and as Canton-type settlement infrastructure deepens Bitcoin integration, capital will flow. The infrastructure is being built by serious teams with real funding. The use cases are real. The path forward is becoming clear.
2025 wasn't the year BTCFi "took off." It was the year the foundation got stronger and the institutional infrastructure began to emerge. The real growth comes in 2026 and beyond, as this infrastructure matures and institutions gain confidence in non-custodial, standardized Bitcoin-linked products that preserve the privacy and settlement requirements that regulated finance demands.
Quantum Computing vs. Long‑Term Bitcoin
For decades, quantum computing was treated as a thought experiment. "Forever 30 years away." A joke about something that would never actually arrive. But in 2025, that narrative shifted. The progress in quantum development became real enough that it stopped being theoretical and started being a problem to solve.
The breakthroughs were concrete: better gate fidelity, error-correction that actually works, logical qubits that don't immediately collapse, and commercial funding pouring in from serious institutions. By the end of 2025, building a cryptographically relevant quantum computer, a machine capable of breaking the encryption that secures Bitcoin, moved from "impossible" to "plausible" in the late 2020s or early 2030s." The Defense Advanced Research Projects Agency (DARPA) explicitly forecasts utility-scale quantum computing around 2033. National governments are planning post-quantum security transitions for 2030-2035. This isn't speculation anymore.
Here's why this matters for Bitcoin: Bitcoin's security depends on one mathematical fact. Your public key sits on the blockchain, but it's mathematically impossible to work backward from that public key to discover your private key. A current computer would need billions of years to solve this. That's the entire security model. A sufficiently powerful quantum computer wouldn't need billions of years. Using Shor's algorithm, it would need minutes.
The scenario is straightforward. When you spend Bitcoin, your public key becomes visible on-chain. A quantum computer will see that public key and derive your private key. Then it will sign a transaction that sends your Bitcoin somewhere else. The coins will be gone.
This isn't a distant threat to some theoretical future. It's a threat to specific Bitcoin that exists right now. Today, roughly a third of all Bitcoin in circulation – on the order of 6.5–6.7 million BTC – sits in outputs whose public keys are already exposed or will be exposed on first spend, making them obvious targets for a future quantum attacker.
This breaks down into three specific categories:
- Legacy P2PK outputs hold roughly 1.9 million Bitcoin. These early wallet formats stored public keys directly in the transaction record. Anyone looking at the blockchain can see them. A quantum computer wouldn't need to figure out anything, the public key is already exposed.
- Coins secured by reused addresses account for approximately 4.7 million Bitcoin. These coins are slightly safer because the public key isn't visible yet. But the moment someone spends from a reused address, the public key broadcasts to the network. Every other Bitcoin in that address becomes vulnerable.
- Taproot P2TR outputs represent about 185,000 Bitcoin. Taproot is newer and more private than legacy formats, but the key-path spending mechanism still exposes a tweaked public key on-chain. This can be fixed with a future soft fork, but it's currently exposed.
Together, that's nearly $600 billion worth of Bitcoin that could be stolen the moment a quantum computer capable of breaking ECDSA comes online. And the number grows every time someone spends old coins for the first time.
For institutional fiduciaries: pension funds, funds, and family offices making long-term Bitcoin allocations, this creates a real problem. They're being asked to allocate capital to an asset that has a known expiration date on its security model. That's not acceptable for institutions managing multi-decade portfolios.
This forces an uncomfortable question: can Bitcoin fix itself before quantum computers arrive?
Technically, yes. Bitcoin has changed before. SegWit took 2.5 years from idea to activation. Taproot took 3.5 years. A migration to quantum-resistant cryptography would require similar coordination, evaluating post-quantum signature schemes, creating new address types, building transition paths for users, and coordinating upgrades across the network. The community would need consensus and serious migration activity by 2028 at the latest. Given Bitcoin's track record of slow, deliberate changes, that timeline is tight.
But there's a deeper problem: a significant share of the legacy risk sits with Satoshi-era coins. Around a million BTC, distributed over more than 22,000 early P2PK outputs, have remained untouched since 2010 and stored in a format that is maximally exposed to a future quantum attacker.
Technically, the network could hard fork those coins away. But that raises a fundamental philosophical question about what Bitcoin actually is. Is it a network that protects property rights, even for coins that haven't moved in 15 years? Or is it willing to confiscate value to protect the broader system?
That's not a technical question. It's a question about Bitcoin's identity.
The real risk isn't that quantum computers will break Bitcoin's consensus or censorship resistance. If quantum computers break Bitcoin, they'll break everything else too - banking systems, military communications, the internet's security infrastructure. Bitcoin isn't uniquely vulnerable, it's just the most obvious symbol of the problem.
The risk is that institutions allocating to Bitcoin today need certainty about whether the protocol can evolve fast enough. In 2025, that certainty didn't exist. But the Bitcoin community hasn't yet answered the basic question: will Bitcoin migrate to post-quantum cryptography in time?
For now, the answer is "probably, but we need to start soon." For institutions, that's not enough. They need to know when, how, and what happens to Bitcoin that's already issued.
This isn't bearish on Bitcoin. It's realistic about what Bitcoin needs to do. Given these timelines and the quantum threat, 2026 will likely see significantly expanded discussion and early proposal work on Bitcoin's post-quantum future.
The Paradox That Explains Everything
Bitcoin was created to escape institutional control of money. Today, institutions hold significant Bitcoin allocations. This isn't a betrayal of Bitcoin's vision. It's proof that the underlying insight was correct.
Satoshi proved that you could create money that can't be inflated, can't be censored, can't be frozen. That innovation didn't depend on ideology or widespread adoption. It depended on mathematics.
Corporations adopted Bitcoin not because they read Satoshi's manifesto. Because mathematics proved sound. Because their capital stack improved. Because they couldn't build better alternatives. Because everyone was asking the same question: Where does Bitcoin fit in our portfolio?
The answer corporations found in 2025 is concrete: Bitcoin fits in every sector, every geography, every capital structure. Bitcoin vindicated itself not by converting the world to its philosophy, but by becoming too useful to ignore.
The information provided by DAIC, including but not limited to research, analysis, data, or other content, is offered solely for informational purposes and does not constitute investment advice, financial advice, trading advice, or any other type of advice. DAIC does not recommend the purchase, sale, or holding of any cryptocurrency or other investment.
