Bitcoin was a hot topic at the recently concluded Exchange conference in Las Vegas. So I connected with Matthew Kimmel, digital assets research analyst at CoinShares, to learn more. CoinShares offers a suite of ETFs, including the CoinShares Valkyrie Bitcoin Miners ETF (WGMI ), a bitcoin mining ETF.
VettaFi: Do you find the current drawdown in bitcoin to be a correction, or start of a bear market?
Kimmel: This looks more like a typical correction than the start of a bear market. Bitcoin’s recent -29% pullback from its $108K+ peak is not insignificant, but it’s not out of the ordinary. In fact, in this current price cycle, we’ve already seen a deeper retrace (-32%) from March to August 2024.
Looking at past cycles, corrections like this are relatively common — 2021 had drops of -31%, -55%, and -25%. And 2017 saw multiple -30% to -40% pullbacks. Volatility is part of bitcoin’s DNA. It globally trades in an intervention-free market with no downtime. And history suggests these moves don’t necessarily signal the end of a cycle.
VettaFi: For those just getting introduced to bitcoin, what are the fundamentals to look for?
Kimmel: The primary fundamentals to focus on are its long-term monetization process and adoption trends, beyond any short-term price movements.
Bitcoin’s investment case isn’t about any single narrative — whether it’s an inflation hedge, a store of value, or an uncorrelated asset. These are just pieces of a much bigger picture. What makes bitcoin investable is its monetary properties — scarcity, liquidity, acceptance, censorship resistance, and so on — making it a unique alternative to compete with existing savings and transactional goods. In any short-term period, its price may appear quite volatile. But zooming out shows a clear trend of increasing adoption and value accrual as it competes for a share of the ~$190 trillion global monetary market.
Currently, while bitcoin has reached widespread awareness, it remains unconventional among mainstream professional investors. And it is still in the early stages of serious consideration in modern portfolios.
Early institutional adoption, ETF inflows, and corporate buying are reinforcing demand, while supply remains mostly constrained and in the hands of longtime individual holders. That said, investors should stay mindful of its historical market cycle patterns.
Bitcoin has a tendency to see strong rallies followed by deep corrections. While, again, the short-term price swings are inevitable, a long-term approach focused on cost-basis management and steady accumulation has historically been the most rational bitcoin investment strategy.
VettaFi: What trends are you seeing from investors, institutions, and advisors when it comes to bitcoin?
Kimmel: Institutional acceptance of bitcoin has been gradually picking up since the U.S. spot ETFs launched. Q4 2024 13-F filings show professional investors now hold $27.4 billion in U.S. bitcoin ETFs — a 114% jump from the previous quarter.
As for who – hedge funds have taken the lead, overtaking advisors as the biggest holders, and for the first time, a sovereign wealth fund has entered the market — Mubadala, the sixth-largest sovereign wealth fund in the Middle East.
That said, most portfolios still allocate less than 1% to bitcoin, meaning we’re likely still in the early innings of institutional adoption. As due diligence approvals increase, we expect bitcoin to move from a speculative trade to a structural portfolio allocation.
For more news, information, and analysis, visit the Crypto Channel.
