By 2026, investors’ concerns are no longer about whether to allocate but how much to allocate and through which tools. Bitcoin is transitioning from a fringe asset in the crypto industry to a new asset class worthy of institutional allocation. This article is based on a piece by ARK Invest, compiled, edited, and written by Foresight News.
(Previous context: Bitmine stock price drops over 9%, female investor Ark Invest continues to buy over 270,000 shares on dips and remains optimistic about ETH reserves)
(Additional background: Exclusive interview with “Female Investor” Cathie Wood: Revealing Ark Invest’s cryptocurrency investment methodology)
Table of Contents
- 2026 Macroeconomic Background
- Monetary Environment and Liquidity
- Policy and Regulatory Normalization
- Structural Demand: ETFs and Digital Asset Treasuries
- ETFs as New Structural Buyers
- Corporate Treasury Accumulation
- Sovereign and Strategic Holdings
- Bitcoin vs. Gold: A Comparison of Store of Value Assets
- Gold Leads, Bitcoin Follows?
- ETF Scale: Bitcoin Growth Outpaces Gold
- Market Structure and Investor Behavior
- Drawdowns, Volatility, and Market Maturity
- Long-term Holding Outperforms Timing
- Current Strategic Questions for Bitcoin
In 2025, Bitcoin continues to integrate into the global financial system. The launch and expansion of spot Bitcoin ETFs, digital asset-related publicly traded companies being included in mainstream stock indices, and a clearer regulatory environment have propelled Bitcoin from a fringe asset in the crypto industry to a new asset class suitable for institutional portfolios.
We believe the core theme of this cycle is Bitcoin shifting from an “optional” new monetary technology to a strategic asset for increasing numbers of investors. Four major trends are reinforcing Bitcoin’s value proposition:
- Macroeconomic and policy environments boosting demand for scarce digital assets;
- Structural changes in ETF, corporate, and sovereign holdings;
- The relationship between Bitcoin, gold, and the broader store of value system;
- Compared to previous cycles, Bitcoin’s drawdowns and volatility are decreasing.
This article will analyze each of these trends in detail.
2026 Macroeconomic Background
Monetary Environment and Liquidity
After a prolonged period of monetary tightening, the macroeconomic landscape is changing: the Federal Reserve’s quantitative tightening (QT) ended last December, and the Fed’s rate-cut cycle remains in its early stages. Over $10 trillion in low-yield money market funds and fixed-income ETFs may soon shift toward risk assets.
Policy and Regulatory Normalization
Regulatory clarity remains a constraint for institutional adoption but also a potential catalyst. Policymakers worldwide are advancing frameworks to clarify digital asset regulation, custody, trading, and disclosure, providing more guidance for institutional investors.
For example, the US CLARITY Act proposes that the Commodity Futures Trading Commission (CFTC) oversee digital commodities, while the Securities and Exchange Commission (SEC) oversees digital securities. This could reduce compliance uncertainty for related companies and institutions. The act provides a compliant pathway across the full lifecycle of digital assets, and through standardized “maturity tests,” tokens can transition from SEC to CFTC regulation after decentralization. Additionally, the dual registration system for broker-dealers reduces the legal vacuum that has long pushed digital asset firms overseas.
The US government is also taking targeted actions on Bitcoin:
- Legislators and industry leaders discuss including Bitcoin in national reserves;
- Regulatory authorities manage confiscated Bitcoin controlled by the federal government;
- States like Texas are leading by adopting Bitcoin as part of their reserves.
Structural Demand: ETFs and Digital Asset Treasuries
ETFs as New Structural Buyers
The scale-up of spot Bitcoin ETFs has fundamentally changed market supply and demand dynamics. By 2025, the Bitcoin held by US spot ETFs and digital asset treasuries (DAT) reached 1.2 times the total new Bitcoin mined plus dormant coins re-entering circulation. By the end of 2025, ETF and DAT holdings accounted for over 12% of Bitcoin’s total circulating supply.
Despite demand outpacing supply, Bitcoin prices have declined, mainly due to external factors: the large liquidation event on October 10 last year, concerns about Bitcoin’s four-year cycle peaking, and negative sentiment from quantum computing threats to Bitcoin’s cryptography.
In Q4, Morgan Stanley and Pioneer Group both incorporated Bitcoin into their investment platforms:
- Morgan Stanley opened compliant Bitcoin products, including spot ETFs, to clients;
- Pioneer Group, which had previously rejected cryptocurrencies and commodities, now also offers third-party Bitcoin ETFs.
As ETFs mature, they will increasingly serve as a structural bridge between Bitcoin markets and traditional capital.
Corporate Treasury Accumulation
Corporate adoption of Bitcoin has expanded from early pioneers to a broader base. Companies like Coinbase and Block, included in the S&P 500 and Nasdaq 100, indirectly hold Bitcoin through their stock holdings.
Strategy (formerly MicroStrategy), as a representative of digital asset treasuries (DAT), has built a large Bitcoin reserve, representing 3.5% of the total supply. As of the end of January 2026, various Bitcoin DAT companies collectively hold over 1.1 million BTC, about 5.7% of the total supply, worth approximately $89.9 billion, mainly held long-term.
Sovereign and Strategic Holdings
In 2025, following El Salvador, the Trump administration used confiscated Bitcoin to establish the US Strategic Bitcoin Reserve (SBR). Currently, the reserve holds about 325,437 BTC, representing 1.6% of the total supply, valued at $25.6 billion.
Bitcoin vs. Gold: A Store of Value Asset Comparison
Gold Leads, Bitcoin Follows?
In recent years, gold and Bitcoin have responded differently to macro narratives such as currency devaluation, real negative interest rates, and geopolitical risks. In 2025, driven by inflation, fiat devaluation, and geopolitical concerns, gold prices surged 64.7%, while Bitcoin declined 6.2%, showing clear divergence.
But this is not the first time:
- In 2016 and 2019, gold outperformed Bitcoin in price gains;
- After the COVID-19 pandemic hit in early 2020, gold rebounded first, followed by a sharp rise in Bitcoin amid fiscal and monetary liquidity explosions.
Historically, Bitcoin is a high-beta, digitally native version of gold in macro assets.
ETF Scale: Bitcoin’s Growth Outpaces Gold
Looking at cumulative ETF inflows, Bitcoin spot ETFs took less than two years to complete what took gold ETFs over 15 years. This indicates that financial advisors, institutions, and retail investors increasingly recognize Bitcoin as a store of value, diversification tool, and new asset class.
Notably, during the current market cycle since 2020, the correlation between Bitcoin and gold returns remains very low. However, gold may still serve as a leading indicator for Bitcoin.
Market Structure and Investor Behavior
Drawdowns, Volatility, and Market Maturity
Bitcoin’s volatility remains high, but its drawdowns are gradually decreasing. Past cycles saw declines of over 70-80% from peak to trough. In the current cycle, since 2022, as of February 8, 2026, Bitcoin’s price has never fallen more than about 50% from its all-time high (see chart), indicating increasing market participation and liquidity.
Long-term Holding Outperforms Timing
Data from Glassnode shows that from 2020 to 2025, even the “worst investors” who bought $1,000 at the peak each year saw their $6,000 principal grow to about $9,660 by the end of 2025, a 61% return; by January 2026, they still had about 45% gains; even after the early February correction, they still had about 29% gains as of February 8.
The conclusion is clear: since 2020, holding periods and position management are far more important than timing.
Current Strategic Questions for Bitcoin
By 2026, the core narrative for Bitcoin is no longer about “survival” but about its role within diversified portfolios. Bitcoin is:
- A scarce non-sovereign asset amid global monetary policies, fiscal deficits, and trade tensions;
- A high-beta extension of traditional store of value assets like gold;
- A globally liquid macro asset accessible through compliant tools.
Long-term holders such as ETFs, corporate treasuries, and sovereign entities have accumulated substantial new Bitcoin holdings. Improved regulation and infrastructure further open participation channels. Historical data shows low correlation between Bitcoin and other assets like gold, and combined with decreasing volatility and drawdowns in this cycle, adding Bitcoin to a portfolio can enhance risk-adjusted returns.
We believe that by 2026, the question for investors is no longer “whether to allocate,” but “how much to allocate and through which tools.”
