VanEck said interest in Bitcoin (BTC) is significantly higher than 12 months ago as institutions and nations continue to push for adoption.
According to a Sept. 19 report, the key reasons behind this surge in interest include growing institutional adoption through exchange-traded products (ETPs) and sovereign involvement in mining and global transactions.
Additionally, the report highlighted that Bitcoin’s correlation with the NASDAQ and equities has varied, but its inverse correlation with the US dollar remains consistent. It suggested that Bitcoin might soon break out of its current pattern, with potential catalysts including the upcoming debt ceiling deadline and the US Presidential Election.
Shifting from NFT speculation
The report highlighted that the protocol known as Inscriptions drove network adoption last year. However, USD-denominated on-chain Bitcoin transfer volumes have surged 202% year-over-year, even as daily inscription transactions declined 93% and on-chain retail activity decreased.
This indicates that Bitcoin continued to gain adoption with larger transaction sizes despite the decline in Inscriptions’ popularity. Inscriptions, which register data on Bitcoin’s blockchain, are primarily associated with inscribing non-fungible tokens (NFTs) called Ordinals.
According to the report:
“With Bitcoin’s on-chain activity diminished, bitcoin’s price appreciation this year is better explained by growing adoption as money: a vehicle for storing and transferring value.”
Additionally, Bitcoin trading volumes have grown 173% year-over-year, far outpacing equity trading volumes, which rose by about 18%.
Institutional players enter the market
According to VanEck, Bitcoin’s resilience as an alternative reserve stems from the influx of institutional investors and the involvement of sovereign nations in BTC mining operations.
This movement by institutional players is driven by two factors. First, the sophistication of products designed for institutions, such as custody solutions and ETPs, has fueled interest. The launch of spot Bitcoin exchange-traded funds (ETFs) in the US this year boosted institutional interest, with $17.6 billion in inflows since Jan. 11, according to Farside Investors data.
Bloomberg senior ETF analyst Eric Balchunas praised the presence of institutions among Bitcoin ETF shareholders on Sept. 9. He noted that over 1,000 institutional investors disclosed investments in these funds during two 13F periods, with BlackRock’s IBIT…
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