Bitcoin (BTC) advocates, who propagate various theories about how high the BTC price could rise, often cite cash exchange-traded fund (ETF) inflows and institutional adoption as reasons for the price to remain above $100,000. However, this type of analysis fails to focus on the fundamental factors that are causing investors to shift their perception of Bitcoin from a high-risk asset to the digital equivalent of gold.
Three real catalysts for Bitcoin’s sustainable price growth include regulatory changes enabling broader institutional participation, easing restrictions on retirement investments, and increasing recognition of Bitcoin as a strategic reserve asset similar to gold.
Institutional Bitcoin adoption is limited due to strict regulations and internal policies.
Banks and pension funds are eager to increase their exposure to Bitcoin, but regulatory and accounting standards present significant obstacles. Most pension funds and asset management companies are not structured to hold physical Bitcoin ETFs due to administrative restrictions or internal mandates that require modification.
Companies like MicroStrategy, in particular, remain exceptional. For example, at Microsoft’s December 10 shareholder meeting, a proposal to add Bitcoin to the company’s balance sheet received minimal support. Moreover, Microsoft’s board of directors previously expressed opposition to the bill, rejecting it almost unanimously.
From a macroeconomic perspective, investor sentiment is closely tied to Federal Reserve guidance. The interest rate agreed upon at the Federal Open Market Committee (FOMC) meeting on January 29th appears to be maintained in the current range of 4.25-4.50%. Regardless of Bitcoin’s risk profile, its high cost of capital continues to constrain economic growth and discourage speculative investment.
As investors anticipate a downturn in the stock and housing markets, demand for cash positions and short-term Treasury bonds strengthens. This pattern was evident in early 2025, when traders flocked to safer assets, even at the cost of reduced profits or losses on positions such as long-term bonds, commercial real estate and stocks.
US Dollar Index (left) and US 6-month Treasury yield. Source: TradingView / Cointelegraph
The surge in demand for safety has sparked a “flight to quality” movement, which has been reflected in U.S. six-month Treasury yields, which have fallen to their lowest level since October 2022 and hover around 4.30%. At the same time, the U.S. dollar strengthened against a basket of foreign currencies as global investors sought refuge in cash reserves. These trends highlight concerns that a potential recession will disproportionately affect other economies while the United States maintains a relative advantage due to its dominant financial position.
SAB 121 Repeal, Retirement Account Reform, and Strategic Bitcoin Reserves
Regulatory changes will play a pivotal role in Bitcoin’s path to widespread adoption. For example, if the SAB 121 directive is repealed, banks will be able to classify stored cryptocurrencies as off-balance sheet items, potentially making them more profitable. These adjustments could influence European regulators to relax MiCA rules, opening the door to Bitcoin being used as collateral for loans or financial products if the regulatory framework evolves accordingly.
relevant: Decentralized platforms can benefit from strict US cryptocurrency tax laws.
Relaxing restrictions on retirement accounts could further accelerate institutional adoption. Once Employee Retirement Income Security Act (ERISA) regulations are relaxed, trustees will have the flexibility to allocate assets to Bitcoin, securing significant capital inflows and promoting broader acceptance of digital assets within the traditional financial system.
Finally, Bitcoin’s role as a strategic reserve asset could gain momentum under the administration of incoming President-elect Donald Trump. While direct government purchases remain uncertain, limiting sales of existing holdings could further integrate Bitcoin into global financial markets by reducing selling pressure and solidifying Bitcoin’s position as a legitimate asset class.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.