Bitwise: Sovereign Wealth Funds Now Buying Bitcoin With Gold Reserves

Sovereign Wealth Funds Shift to Bitcoin

Sovereign wealth funds are beginning to sell gold reserves and allocate capital to Bitcoin, according to Ryan Rasmussen, Head of Research at Bitwise. This trend, highlighted in Bitwise’s recent institutional crypto adoption report, reflects a growing acceptance of Bitcoin as a store of value alongside gold, particularly as a hedge against potential currency debasement.

Institutional Resilience Through the Bear Market

Rasmussen noted that during the 2022 market downturn – when Bitcoin’s price fell from $125,000 to $60,000 – none of the 15 major institutions Bitwise interviewed sold their Bitcoin holdings. Many, in fact, increased their positions. This demonstrates a long-term investment horizon among these institutions.

ETF Inflows and Market Impact

The launch of spot Bitcoin ETFs has further fueled institutional interest. Weekly inflows currently stand at $2.5 billion, introducing a new wave of capital into the Bitcoin market. Rasmussen suggests these ETFs contributed to a shallower bear market than previously experienced, indicating increased demand and liquidity. Institutions like Wells Fargo are considering a 2-3% allocation to Bitcoin, while firms like Fidelity and BlackRock are exploring allocations in the 2-8% range.

Bitcoin and Gold: A Complementary Relationship

Bitwise’s research indicates institutions are not viewing Bitcoin as a replacement for gold, but rather as a complementary asset. Both are held as safeguards against economic uncertainty and potential monetary policy failures. Rasmussen believes the market bottomed around the $60,000 level, citing the continued accumulation by institutions.

Source: Bitcoin Magazine