Despite robust institutional interest, Bitcoin (BTC) has wrestled with reclaiming the significant $100,000 mark for over 50 days, leaving investors both perplexed and anxious about the ongoing bearish sentiment. This downturn is fascinating, especially in light of a recent executive order issued by former President Donald Trump on March 6, which paves the way for BTC acquisitions under “budget-neutral” strategies, indicating a possible institutional embrace of cryptocurrencies.
### Bitcoin’s Lag Behind Gold
One prominent point of contention is Bitcoin’s failure to keep pace with gold’s remarkable performance, which is just 1.3% shy of its all-time high of $3,057. For instance, on March 26, GameStop Corporation (GME)—a company that transformed its fortunes after a historic short squeeze—declared intentions to allocate part of its corporate reserves to Bitcoin. With an impressive cash reserve that climbed to $4.77 billion by February 2025, GME’s decision illustrates a broader trend where companies are increasingly following the playbook established by firms like MicroStrategy (MSTR).
This influx of corporate interest in Bitcoin is echoed in moves by other firms, such as the Japanese company Metaplanet, which recently appointed Eric Trump to its strategic board, and the mining powerhouse MARA Holdings (MARA), which has embraced a policy to retain all Bitcoin and look for ways to bolster its holdings through debt. Despite this growing corporate interest, the question remains: why are investors offloading Bitcoin when sentiment towards commodities like gold is buoyant?
### Regulatory Hurdles and Market Integration
Part of the explanation lies in the underdeveloped infrastructure that inhibits Bitcoin’s functionality within traditional financial systems. For instance, the U.S. spot Bitcoin exchange-traded fund (ETF) is limited to cash settlement, barring in-kind deposits and withdrawals. However, there may be silver linings on the horizon; a possible regulatory rule change by the U.S. Securities and Exchange Commission (SEC) could foster improved tax efficiency, a point raised by Bitseeker Consulting chief architect Chris J. Terry.
Still, the integration of Bitcoin into traditional finance (TradFi) systems remains fraught with challenges. Major banks, such as JPMorgan, primarily act as intermediaries for cryptocurrency instruments rather than embracing Bitcoin directly. Additionally, while the removal of the SAB 121 accounting rule may seem promising, it has not necessarily translated into broader acceptance and adoption among traditional investment firms. Companies like Vanguard, for instance, continue to restrict clients from trading spot Bitcoin ETFs, reflecting a significant gap in cryptocurrency accessibility for institutional investors.
### The Complexity of the Bitcoin Derivatives Market
Moreover, the Bitcoin derivatives market illustrates another layer of complications. Many exchanges have opted to ban participants from North America, instead choosing to set up shop in jurisdictions with fewer regulatory barriers and capital requirements. Although the Chicago Mercantile Exchange (CME) has made strides in Bitcoin futures, it still only accounts for 23% of the market’s $56.4 billion open interest, where competing exchanges continue to attract business due to their less stringent trading conditions.
The regulatory landscape for Bitcoin derivatives remains unclear, and traditional investment firms frequently grapple with concerns over market manipulation and transparency on leading exchanges. Reports detailing significant fines levied against major platforms for anti-money laundering violations only exacerbate this hesitance among institutional investors. Concerns about credibility are further exacerbated as firms like Binance and Kraken face scrutiny, leaving many investment firms reluctant to dive into Bitcoin markets.
### A Limited Buy-In from Institutions
Despite certain companies directing their reserves towards Bitcoin, the overall buying pressure from a limited sector is insufficient to elevate Bitcoin’s price to staggering heights like $200,000. While pro-crypto policy shifts from the U.S. government create an ostensibly favorable environment, the uncertainty surrounding full-fledged integration with the banking sector hampers potential growth avenues for Bitcoin.
In this climate of heightened risk perception, particularly among institutional investors, Bitcoin’s upside may remain constrained. The market’s existing dynamics, regulatory complexities, and the sporadic pace of adoption all contribute to a mixed narrative for Bitcoin, establishing a paradox where institutional enthusiasm is unable to overcome market skepticism.
As Bitcoin vacillates below critical price levels, investors find themselves in a state of watchful waiting, hoping for favorable changes that might alter the current course of this leading cryptocurrency.
