Bitcoin is no longer just a financial asset – it’s a political one

For years, bitcoin was dismissed as a niche asset – too volatile for institutions, too unregulated for policymakers. However, this perception has shifted. Bitcoin is no longer just a financial asset; it has become a political and strategic tool, shaping policy decisions, institutional investment, and even national economic strategies.

Donald Trump’s return to the White House has brought this transformation into sharp focus. His administration’s executive order on digital assets signals a policy shift: rather than suppressing bitcoin, the US is increasingly viewing it as a strategic financial instrument – and as a result, investment in bitcoin has soared.

Thanks to Donald Trump, bitcoin is not just a trade but a core asset class, integrated into the financial system.Credit: Getty

In the past month alone, from January 14 until February 14, 2025, bitcoin ETFs in the US have seen over $US4 billion in net inflows, while both Australian bitcoin and ethereum ETFs picked up $US22 million, despite bitcoin pulling back 10 per cent from its recent peak.

Bitcoin ETFs now hold nearly 6 per cent of the worldwide bitcoin supply, potentially influencing underlying demand, surpassing the 2 per cent of global gold supply held by gold ETFs. US and Australian spot bitcoin ETFs have experienced remarkable growth, attracting tens of billions of dollars within the last 12 months.

This influx of capital highlights how institutional adoption remains strong, even during periods of market volatility, with signs of less regulation also supporting the digital currency.

While details remain vague, discussions about a US bitcoin reserve and a more relaxed regulatory environment are gaining traction. These moves mark a break from the past, reinforcing bitcoin’s legitimacy at the highest levels of government.

Bitcoin is not just a trade, but it is becoming a core asset class, integrated into the financial system.

But the story isn’t just about political posturing. Beneath the headlines, bitcoin’s infrastructure is evolving at an extraordinary pace. The approval of spot bitcoin ETFs has transformed how capital flows into digital assets, unlocking institutional demand that was previously constrained by regulatory uncertainty.

This is set to trigger more retail money into cryptocurrency ETFs. Potential regulatory changes and the ease of investing in bitcoin is likely to add to its demand. Spot bitcoin ETFs are making it much easier for anyone to invest with just a few hundred dollars.

Bitcoin is currently trading near $US100,000, and while short-term fluctuations are inevitable, this cycle is fundamentally different from previous speculative runs. Unlike the retail-driven frenzy of 2017 or the debt-fuelled excess of 2021, bitcoin’s price has now shaped long-term capital flows, including greater institutional demand.

If this pattern holds, bitcoin reaching $US120,000 could be a conservative target, with more bullish estimates pointing toward $US150,000–$US200,000 in 2025. The key difference this time? Bitcoin is not just a trade, but it is becoming a core asset class, integrated into the financial system in ways that were previously unimaginable.

Ethereum (ETH) is seeing a similar shift, though its price action has been more volatile. ETH is currently down 33 per cent from its recent peak, but over the past month, ethereum ETFs have still attracted over $US700 million in net inflows.

This suggests institutional investors are continuing to accumulate, even amid short-term price corrections. We expect retail investors to catch up as focus on the digital sector grows with Trump US government initiatives.

While price speculation dominates most bitcoin conversations, the bigger story is the infrastructure being built around it.

Bitcoin mining is no longer just about creating new bitcoin. Some of the biggest mining companies are now expanding into high-performance computing (HPC), a key technology behind artificial intelligence. This shift is driving their growth, with companies such as Marathon Digital and Riot Platforms doubling in market value.

For investors, this highlights how bitcoin-related businesses are evolving beyond just crypto, potentially making them more resilient and valuable over time. Secure storage of bitcoin is a key piece of the puzzle for institutional adoption.

Just as banks safeguard traditional assets, firms such as Fidelity and BlackRock now provide regulated custody solutions for bitcoin, enabling ETFs and large investors to participate with confidence.

This growing infrastructure is reinforcing bitcoin’s position in mainstream finance. This mirrors the evolution of the gold market in the 1970s, when ETFs transformed gold from a niche asset into a widely held financial instrument. The companies facilitating these custody solutions are becoming the gatekeepers of institutional bitcoin ownership.

Billy Leung is a senior investment strategist at ETF provider Global X.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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