Institutional investors are quickly adding Bitcoin ETFs to their portfolios as alternatives to traditional bonds.
- US Bitcoin ETF holdings hit $27.4 billion in Q4 2024, up 114%.
- Pension funds and advisers are allocating small amounts to Bitcoin ETFs.
- BlackRock and Fidelity lead the surge with top-traded Bitcoin ETF products.
Institutional Adoption of Bitcoin ETFs Soars
Since the SEC approved spot Bitcoin ETFs in January 2024, institutions have been pouring in. By the fourth quarter of 2024, US Bitcoin ETF holdings doubled to $27.4 billion. Investment firms like BlackRock, Fidelity, VanEck, ARK Invest and Grayscale now manage many of these ETFs. Advisers alone held over $10.3 billion by June 2025, showing strong confidence in Bitcoin as an asset class.
Rising Interest from Pension and Retirement Funds
More public funds are exploring these ETFs. The Wisconsin State Investment Board grew its investment in BlackRock’s ETF from $99 million to over $321 million. The Michigan State Investment Board and Houston Firefighters’ Relief Fund have also joined. These funds are using Bitcoin ETFs to try and improve returns while staying within regulations. In June 2025, ARK’s Bitcoin ETF even had a 3-for-1 share split to make shares easier to trade.
Bitcoin vs Bonds: A Shift in Portfolio Strategy
Bitcoin returned 114% in 2024, beating many other asset classes. But it also comes with higher risk. Bonds offered stable income, like iShares 20 Year Treasury Bond ETF yielding 4.55%. However, low yields and inflation are pushing institutions to look for alternatives. A 2024 study found portfolios with 5% Bitcoin could boost returns by 3%, but volatility would increase.
Tokenized Assets Offer New Options
Some firms are testing tokenized fixed income products. These are traditional bonds issued on blockchain networks. BlackRock’s BUIDL fund topped $1.7 billion in assets on seven blockchains. Franklin Templeton also offers tokenized treasury products. These innovations give institutional investors new ways to earn yield using crypto-linked tools.
Risks and Considerations
Bitcoin ETFs come with risks. Price swings can be large, and the lack of regular income makes them less attractive for some. Regulations can change fast, and challenges like custody and ESG concerns remain. Still, Bitcoin ETFs offer diversification in times of low bond returns.
Institutions might not fully replace bonds with Bitcoin ETFs, but many are testing small allocations. Experts like BlackRock suggest a 1–2% allocation to balance opportunity and risk.
Source: cointelegraph.com
