Bitwise: The capital flowing into Bitcoin is expected to reach 420 billion USD by 2026

The demand for Bitcoin from various investors, including publicly listed companies building Bitcoin treasuries, national investment funds, ETF funds, and countries, is expected to drive capital flows into this asset in the coming years.

According to Bitwise, the inflow of capital into Bitcoin could reach 120 billion USD by the end of 2025, with an additional 300 billion USD predicted for 2026.

In a recent report: "Forecast of capital flows from institutional investors into Bitcoin in 2025/2026", Bitwise emphasized that U.S. spot Bitcoin ETF funds recorded a net capital inflow of $36.2 billion in 2024, surpassing SPDR gold Shares (GLD), the fund that revolutionizes gold investment.

Bitcoin ETF funds reached 125 billion USD in assets under management (AUM) within 12 months, 20 times faster than GLD. This indicates that Bitcoin will greatly outperform gold, with the potential for cash flow to triple to 100 billion USD annually by 2027.

Forecast on spot Bitcoin ETF and gold funds | Source: BitwiseDespite the increase, the demand for Bitcoin worth 35 billion USD is still "out of reach" due to compliance risk policies at major corporations like Morgan Stanley and Goldman Sachs, which manage 60 trillion USD in client assets.

These companies require a long-term track record, but the legality and increasing popularity of BTC ETF is expected to help unlock this source of capital.

Jurrien Timmer, Global Macro Director at Fidelity, commented that Bitcoin trading above $100,000 signals the potential to replace gold's role as a store of value.

His analysis also points out the recent convergence in the Sharpe Ratio of Bitcoin and gold, indicating that both of these assets are becoming increasingly equivalent in terms of risk-adjusted returns.

Asset Allocation Forecast for BTC

In addition to ETFs and asset management companies, the appeal of Bitcoin as a reserve asset is increasing among public companies, private firms, and national investment funds.

Companies currently hold approximately 1,146,128 BTC, worth 125 billion USD, accounting for 5.8% of the total supply of BTC.

National investment funds hold a total of 529,705 BTC (57.8 billion USD), with the United States (207,189 BTC), China (194,000 BTC), and the United Kingdom (61,000 BTC).

The senior investment strategist of Bitwise – Juan Leon, the head of the UXTO research team – Guillaume Girard, and analyst Will Owens expect that the allocation of assets into BTC will continue, while outlining different scenarios.

In the worst-case scenario, countries only allocate 1% of their gold reserves to Bitcoin, creating a cash flow of 32.3 billion USD ( 23,000 BTC or 1.54% of the supply ). The states of the United States generate a BTC reserve fund at 10%, adding 6.5 billion USD, while asset management platforms allocate 0.1% of assets ( 60 billion USD ). Public companies contribute an additional 58.9 billion USD, raising the total cash flow to over 150 billion USD.

The basic case forecasts that countries allocate 5% of their gold reserves, equivalent to 161.7 billion USD ( 1,617,000 BTC or 7.7% of the supply ). The states of the United States increase the adoption rate to 30% ( 19.6 billion USD ), asset platforms allocate 0.5% ( 300 billion USD ) and public companies double their holdings to 117.8 billion USD.

This scenario aligns with Bitwise's forecast of 120 billion USD by 2025 and 300 billion USD in 2026, accounting for 20.32% of the Bitcoin supply.

In an optimistic scenario, the conversion of 10% of gold reserves held by countries into Bitcoin would drive a cash flow of 323.4 billion USD (3.234.000 BTC or 15.38% of the supply ). The adoption rate of the state of the United States increases to 70% (45.8 billion USD ), asset platforms allocate 1% (600 billion USD ), and public companies quadruple their holdings to 235.6 billion USD. In total, cash flows could exceed 426.9 billion USD, absorbing 4,269,000 BTC.

The increasing interest of organizations and governments in BTC underscores confidence in the long-term value of the leading asset. With 94.6% of the supply already mined (19.868.987 BTC as of May 2025), Bitcoin is seen as a hedge against inflation and the devaluation of fiat currency.

Vincent