While many cryptocurrency sceptics were convinced the day would never come, the adoption of Bitcoin by major financial institutions and state governments underscores a turning point in cryptocurrency’s path to mainstream acceptance.

Bitcoin ETFs have broken records since their launch in January, with the total assets under management estimated at approximately $52 billion. Large institutional capital flows have driven the increase in adoption. On the other hand, several US States already or will soon be accepting cryptocurrency as a means of payment to settle tax obligations. This all points to the mainstream adoption of cryptocurrency and increased demand, which typically leads to higher prices.

World’s largest asset manager powers the rise of Bitcoin ETF’s

BlackRock’s Bitcoin ETF (BlackRock ETF) has shattered records and become the fastest-growing ETF in history. Since its launch in January 2024, the BlackRock ETF has reached $30 billion in assets under management (AUM). Notably, the BlackRock ETF reached $10 billion in capital under management within seven weeks, whereas the SPDR Gold Shares ETF took over two years to achieve the same milestone.

Institutional adoption at scale

Institutional interest in Bitcoin ETFs has surged, as evidenced by 13F filings—a quarterly report required by the SEC for large institutional investment managers.

Here are some of the top Bitcoin ETF holders from 13F filings:

This wave of institutional adoption demonstrates a significant shift toward accepting Bitcoin as part of a broader investment strategy, reflecting growing confidence in its long-term value proposition.

Pension funds investing in Bitcoin ETFs

Several U.S. state pension funds have also taken steps to invest in Bitcoin ETFs. The State of Wisconsin Investment Board (capital under management of $156 billion) recently disclosed that it owns shares of the iShares Bitcoin Trust valued at $98.9 million. Similarly, the State of Michigan Retirement System (AUM of $19.1 billion) reported holding $6.6 million worth of ARK Bitcoin ETF shares and $10 million exposure to Grayscale’s Ethereum Trust.

Florida’s Chief Financial Officer, Jimmy Patronis, has proposed including Bitcoin in the state’s pension fund (AUM $201 billion), calling it “digital gold.” In a letter to the Florida State Board of Administration, Patronis highlighted the potential of Bitcoin to diversify the state’s portfolio and provide a hedge against inflation and volatility. He also pointed out that other states like Wisconsin and Michigan have already included Bitcoin in their pension funds.

US states accepting crypto for taxes

Colorado and Louisiana have already started accepting crypto payments for taxes and state services. Colorado launched its initiative in 2022, while Louisiana began accepting Bitcoin and USDC for state payments in 2024.

In September 2024, Ohio State Senator Niraj Antani introduced a bill requiring the state and all local political subdivisions to accept cryptocurrency for state and local taxes and fees. Antani emphasised the importance of embracing cryptocurrency as part of the present-day economy because it encourages innovation and free enterprise. The bill also allows state universities and pension funds to invest in cryptocurrencies.

In the short term, these moves by prominent financial and public firms in the world’s most advanced economy indicate their recognition of Bitcoin as a valuable asset for diversification and inflation hedging amid economic volatility. Over the long term, should these levels of adoption continue, the increased demand will exert upward pressure on prices and likely drive sustained increases as digital assets integrate into mainstream finance.