It’s been a bumpy start to 2025 for bitcoin and the broader cryptocurrency universe. Amid soaring optimism that this year could be a tipping point for bitcoin and other digital currencies, trade tariffs and indications inflation remains are among the factors weighing on risk assets.
For the week ending February 7, bitcoin was saddled with a loss of almost 6%, while other cryptocurrencies were sporting weekly losses in excess of 20%. To be sure, those aren’t positive data points. But it’s also certain that 2025 isn’t even two months old, meaning there’s plenty of time for this to be the banner year many crypto bulls are hoping for.
Should that scenario play out, it’s likely that spot bitcoin ETFs like the WisdomTree Bitcoin Fund (BTCW ) will benefit. BTCW and rival ETFs are barely more than a year removed from their respective debuts, but the case for bitcoin in the ETF wrapper is gaining steam as more advisors and retail investors look for familiar, practical avenues for gaining crypto exposure.
Crypto Catalysts Still Abound
While bitcoin and ETFs like BTCW sold off last week, the funds are still sporting year-to-date gains and the fundamental catalysts some market participants are banking on remain in place. Those include bitcoin’s potential as an inflation hedge and rising adoption among professional investors.
“Bitcoin’s fixed supply of 21 million coins makes it a potential inflation hedge,” noted Christopher Gannatti, global head of research at WisdomTree. “While gold has served this role for centuries due to its scarcity and historical acceptance, Bitcoin offers distinct advantages: digital divisibility, portability and resistance to physical theft. Its adoption by tech-savvy investors underscores its growing role in modern financial systems and potential portfolio diversification.”
On the institutional adoption front, Gannatti highlighted recent bitcoin purchases by the state retirement plans of Michigan and Wisconsin. Some market observers believe that theme is poised to increase as ETFs such a BTCW make it easier for professional allocators to add bitcoin exposure.
The White House’s efforts to establish a national bitcoin reserve, though likely slow-moving, also remain a possible catalyst for the largest digital currency this year. It could require patience, but should the idea come to fruition, it could boost BTCW.
“The establishment of a National Bitcoin Reserve would not only enhance the U.S.’s position in the digital economy but also set a precedent for how nations can integrate decentralized assets into their fiscal strategies. Notably, countries such as El Salvador have already made strides in this area. El Salvador, for instance, declared Bitcoin legal tender in 2021 and has since accumulated Bitcoin in its national reserve, using it to promote financial inclusion and attract foreign investment,” concluded Gannatti.
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