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[Bitcoin and the Next Wave of Institutional Capital](https://bitcoinmagazine.com/bigread/institutional-capital-bitcoin-bigread)

There are multiple approaches to valuing bitcoin and they can differ from traditional, institutional asset class valuations. The reason is that bitcoin can be regarded as a currency, a commodity, or a monetary payment network — at the same time. Bitcoin has many different characteristics which is why many different valuation approaches can be applied.

> 3/ “[#Bitcoin](https://twitter.com/hashtag/Bitcoin?src=hash&ref_src=twsrc%5Etfw) is not a stock, nor is it a startup or any investment fund… this is a completely different animal than other types of assets that people are trying to compare it to. You need to view it through a

> different lense.”

> – [@MartyBent](https://twitter.com/MartyBent?ref_src=twsrc%5Etfw)

>

> — André Dragosch, PhD

From a pure investment point of view, bitcoin has been one of the best-performing “store-of-value” investments of the past 10+ years, outperforming traditional assets like U.S. equities or gold by a very wide margin. 


Why Adoption — Including Institutional Adoption — Will Increase Over Time  

With respect to the [adoption of bitcoin](https://bitcoinmagazine.com/featured/how-the-imf-prevents-global-bitcoin-adoption-and-why-they-do-it) as a superior monetary technology, there are different segments of society that will be shaped in different ways. Think about the following:

1. Individuals

Pervasive consumer price inflation has led to an erosion of purchasing power over the past decades, especially since the introduction of the fiat standard in 1971. Consumers have seen their [purchasing power erode, particularly in housing](https://www.bitcoinmagazinepro.com/bitcoin-portfolio/property-priced-in-btc-infographic/). 

As this erosion continues, individuals who adopt bitcoin as their primary store of value will see their [purchasing power increase over time](https://bitcoinmagazine.com/markets/bitcoin-increases-your-purchasing-power), especially relative to their social circle. 

This will encourage others to copy this behavior to “keep up with the Joneses” (a Schelling Point in behavioral economics). 

It is a focal point that individuals use to guide their decisions when trying to predict what others will do. Bitcoin will serve as that Schelling Point. 

2. Asset managers

It is widely known that only a [small portfolio allocation to bitcoin](https://bitcoinmagazine.com/bitcoin-for-corporations/what-if-the-magnificent-7-allocated-just-1-of-their-cash-to-bitcoin) can already have very significant effects on overall portfolio performance without a significant increase in portfolio volatility. In other words, a small bitcoin allocation can increase risk-adjusted returns of your portfolio, letting asset managers build more efficient portfolios. 

In 2024, bitcoin was by far the best-performing major asset with a return of 121%, outperforming the S&P 500 but also the top hedge funds in the world. 

In fact, bitcoin has been the best-performing major asset since 2011 in all years except 2014, 2018, and 2022. 

The asset managers who added bitcoin to their multi-asset portfolio were able to outperform their peers both on an absolute and risk-adjusted basis. They will most likely win tomorrow’s Morningstar or Lipper Fund awards for outperforming their peers and exhibiting superior performance metrics. 

Social and economic pressure exerted by clients and superiors will ultimately increase for those asset managers who don’t add bitcoin to their multi-asset portfolios. 

In order to keep up with those who do, the only viable long-term solution will be to add bitcoin to their multi-asset portfolio, leading to increasing institutional adoption over time. 

3. Corporations

The economic motive to add bitcoin to corporate balance sheets is similar to that of individuals: to guard the corporate cash balances against erosions of purchasing power over time, which is suboptimal for its shareholders. 

Moreover, corporations will be incentivized economically to add bitcoin to their balance sheet, because those who have outperformed their peers by a very wide margin. 

Take [Metaplanet](https://bitcoinmagazine.com/tags/metaplanet) in Japan, for example. 

Metaplanet and its CEO Simon Gerovich were relatively unknown in Japan at the start of 2024. With a market capitalization of just JPY 1.95 billion (USD 14.5 million) at the start of 2024, Metaplanet was in the bottom 500 Japanese companies on the Topix, which tracks around 2,000 companies listed on the Tokyo Stock Exchange. 

Metaplanet, normally engaged in diversified businesses such as finance, trading and real estate, publicly announced in early April 2024 that it would adopt a bitcoin standard and acquire BTC as the core asset of its treasury, committing an initial investment of 1 billion JPY (approximately 6.5 million USD). 

This strategic move was inspired by MicroStrategy’s approach to bitcoin adoption. The company completed its first bitcoin purchase on April 22, 2024, acquiring 97.85 BTC for 1 billion JPY. 

By the end of October 2024, Metaplanet had become the largest corporate bitcoin holder in Asia, surpassing competitors such as Nexon and Meitu. 

As a result, its share price outperformed every single stock in the Topix and MSCI World in 2024, boasting a whopping +2,629% return. 

Metaplanet is now among the top-5 largest corporate bitcoin holders in the world, with over [16,000 BTC](https://bitcoinmagazine.com/bitcoin-for-corporations/what-if-the-magnificent-7-allocated-just-1-of-their-cash-to-bitcoin) on its balance sheet, according to the latest data from bitcointreasuries.net.

Metaplanet’s move is emblematic of the growing global appetite for bitcoin as part of corporate treasury strategy.

What is more is that it has very significant implications for other companies: 

It is only a matter of time before not adopting bitcoin could result in a significant disadvantage for shareholders, as companies that do adopt bitcoin continue to outperform non-adopters by a wide margin.

As with asset managers, there will be increasing social and economic pressure on corporate boards and CEOs to adopt a bitcoin standard.

4. Sovereigns 

Sovereign adoption might have slightly different mechanics than private-sector adoption of bitcoin but the incentives are, mostly, of an economic nature as well. 

El Salvador declared bitcoin legal tender in September 2021 and officially adopted a bitcoin standard. It was the very first country in the world to announce such a move. Since then, the [country’s treasury](than 6,000 BTC(https://bitcointreasuries.net/governments/el-salvador). 

As a result, El Salvador’s credit rating has significantly improved from a composite issuer rating of CCC+ in July 2021 to B- according to data provided by Bloomberg.

The improvement in credit rating was also due to a significant improvement in tourist arrivals and overall acceleration in GDP growth, which were also direct consequences of the move to adopt a bitcoin standard: It both fuelled domestic “animal spirits” and attracted more international visitors.

Nonetheless, this example goes a long way in demonstrating the economic benefits, direct and indirect, of adopting a bitcoin standard for nation-states. 

In fact, El Salvador’s 1-year sovereign default probability declined significantly from a high of around 20% in April 2021 to slightly below 5% in March 2025, according to data provided by Bloomberg.  

The decline in sovereign default probabilities is also generally beneficial for the country’s exchange rate since there is an inverse relationship between sovereign credit default swaps and exchange rates, especially in [emerging market countries](https://research.cbs.dk/en/publications/exchange-rates-and-sovereign-risk).

To sum up, other sovereign nations will likely be incentivized to adopt bitcoin because of the following reasons:

Social dynamics of Bitcoin adoption

> 9/ “Being against [#bitcoin](https://twitter.com/hashtag/bitcoin?src=hash&ref_src=twsrc%5Etfw) is not original. Everyone starts out as a critic. It’s the default position. But, with knowledge, growth occurs.

>

> And critics morph into advocates. Remaining a critic indefinitely is a sign of intellectual stagnation.”

> – [@anilsaidso](https://twitter.com/anilsaidso?ref_src=twsrc%5Etfw)

>

> — André Dragosch, PhD

There are several behavioral phenomena that could accelerate th