The U.S.-listed cryptocurrency exchange Coinbase's institutional strategy head, John D'Agostino, recently stated that large institutional investors, including sovereign wealth funds and major insurance capital pools, continue to increase their Bitcoin (BTC) investment positions in April.
D'Agostino emphasized that these traditionally conservative asset allocators are gradually accepting Bitcoin against the backdrop of rapidly evolving global monetary environments and incorporating it into broader investment portfolio strategies.
Three Major Reasons for Capital Inflow into Bitcoin
D'Agostino pointed out that the institutional capital flow into Bitcoin in April is primarily driven by three interconnected factors:
1. De-dollarization and Portfolio Adjustment
First, the comprehensive tariff policies implemented by U.S. President Trump at the beginning of this month have triggered a re-examination of the U.S. dollar's sustainability as the primary reserve currency among global asset allocators. D'Agostino stated that some sovereign wealth funds are reassessing their allocation strategies for U.S. dollars, gold, and other reserve assets, opting to directly purchase Bitcoin with their local currencies to increase their Bitcoin holdings.
He added that these institutions anticipate a potential reduction in global trade denominated in U.S. dollars and a slowdown in the U.S. economic growth, making them more willing to view Bitcoin as a non-sovereign value storage tool to hedge against the risk of declining U.S. asset demand.
2. Retail Capital Outflow, Institutional Capital Inflow
Additionally, while Bitcoin exchange-traded funds (ETFs) experienced net outflows for most of April, Bitcoin spot ETFs recorded a net inflow of $1.3 billion between April 21-22.
D'Agostino explained that Coinbase observed continuous net buying behavior from long-term capital allocators, particularly sovereign wealth funds and insurance companies, whose direct purchase activities have not diminished due to market fluctuations.
He emphasized that ETF fund flows cannot fully reflect institutional investor trends, as sovereign buyers typically do not publicly disclose their positions. Moreover, long-term holders are also purchasing spot Bitcoin during market downturns, which explains why Bitcoin prices have decoupled from ETF fund flows.
3. Inflation Hedging and Gold Alternatives
D'Agostino lastly stated that institutional investors are increasingly viewing Bitcoin as an inflation hedging asset, with its core attributes of fixed supply, immutability, non-sovereign control, and portability renewing its investment value.
He mentioned that Bitcoin is often ranked among the top five assets in long-term inflation hedging models for global macro traders, alongside gold and real estate. As Bitcoin gradually disconnects from leveraged tech trading, its role as a gold alternative becomes increasingly prominent, thereby attracting more long-term capital inflow.
Bitcoin Price Trends and Market Connections
Additionally, it is worth noting that Bitcoin's current correlation with the U.S. stock market is weakening. In the past, Bitcoin prices were highly correlated with U.S. tech stocks, but as its inflation hedging attributes gain attention, its price fluctuations are gradually decoupling from U.S. stock indices like the S&P 500.
Conversely, Bitcoin's connection with gold is increasingly strengthening, with both viewed as hedging assets against currency depreciation and geopolitical uncertainties. D'Agostino believes that Bitcoin's unique positioning as a non-sovereign asset makes its role in institutional portfolios increasingly similar to that of gold.
