Source: Cointelegraph Original: "{title}"
Despite strong institutional demand, Bitcoin has struggled to return to the $100,000 mark over the past 50 days, leading investors to question why the market remains sluggish in what seems to be a positive environment. This price weakness is particularly striking, especially after former U.S. President Trump issued the "U.S. Strategic Bitcoin Reserve Executive Order" on March 6. This order allows for Bitcoin acquisitions as long as they adhere to a "budget-neutral" strategy.
Despite the positive news flow, Bitcoin has failed to keep pace with gold's returns.
On March 26, North American video game and consumer electronics retailer GameStop (GME) announced plans to allocate part of its corporate reserve funds to Bitcoin. The company, which was on the brink of bankruptcy in 2021, successfully leveraged a historic short squeeze, ultimately securing an impressive $4.77 billion in cash and equivalents by February 2025.
Largest corporate Bitcoin holdings. Source: BitcoinTreasuries.NET
An increasing number of U.S. and international companies are beginning to follow Michael Saylor's strategy (MSTR), including the Japanese company Metaplanet, which recently appointed Eric Trump, son of former U.S. President Donald Trump, as a member of its newly established strategic advisory board. Similarly, mining giant MARA has also adopted a Bitcoin treasury policy, deciding to "hold all Bitcoin" and increase its Bitcoin exposure through debt financing.
Bitcoin investors must have strong reasons to sell their holdings, especially when gold prices are only 1.3% below their all-time high of $3,057. For instance, despite the U.S. government adopting a pro-crypto stance after Trump's election, the infrastructure needed for Bitcoin to be used as collateral and integrated into the traditional financial system remains largely undeveloped.
Bitcoin/USD (orange) vs. Gold/S&P 500 index. Source: TradingView / Cointelegraph
Currently, U.S. spot Bitcoin exchange-traded funds (ETFs) are limited to cash settlement, prohibiting physical deposits and withdrawals. However, a potential rule change under review by the U.S. Securities and Exchange Commission (SEC) could reduce capital gains distributions and improve tax efficiency. According to Chris J. Terry, Chief Architect at Bitseeker Consulting, this change could have a positive impact on the market.
Regulatory integration of Bitcoin into traditional finance (TradFi) remains a challenge.
Banks like JPMorgan primarily act as intermediaries or custodians, providing services for cryptocurrency-related instruments such as derivatives and spot Bitcoin ETFs. On January 23, the SEC repealed the SAB 121 accounting rule, which imposed strict capital requirements on digital assets. However, this change does not necessarily mean that Bitcoin will be more widely accepted.
For example, traditional investment firms like Vanguard still prohibit clients from trading or holding spot Bitcoin ETFs, while institutions like BNY Mellon reportedly restrict mutual funds' exposure to these products. In fact, many wealth management firms and investment advisors are still unable to offer any cryptocurrency investment products to clients, even if they are listed on U.S. exchanges.
Additionally, the Bitcoin derivatives market lacks regulatory clarity, with most exchanges choosing to ban North American users and registering companies in offshore tax havens. Although the Chicago Mercantile Exchange (CME) has grown rapidly in recent years, its Bitcoin futures open interest (OI) still only accounts for 23% of the total market of $56.4 billion, while competitors capture a larger market share due to fewer capital restrictions, simpler client registration, and more lenient regulations.
Bitcoin futures open interest ranking (USD). Source: CoinGlass
Institutional investors remain cautious about entering the Bitcoin market due to concerns over market manipulation and a lack of transparency at major exchanges. In fact, exchanges like Binance, KuCoin, OK, and Kraken have paid hefty fines to U.S. authorities for potential anti-money laundering violations and unlicensed operations, further exacerbating negative sentiment towards the industry.
Ultimately, the purchasing interest of a few companies is insufficient to drive Bitcoin prices up to $200,000, despite a more favorable regulatory environment, and further integration with the banking sector remains fraught with uncertainty.
Before that, Bitcoin's upside potential will continue to be limited, especially among institutional investors, where risk perception remains high.
Related: GameStop's stock price rose 12% after announcing plans to purchase Bitcoin.
This article is for general informational purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed in the text are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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