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Accelerated Institutional Adoption of Bitcoin - Unlocking US 401(k) Investments, ETFs, and Corporate Entities Continue to Accumulate on a Large Scale
The Best Environment Since 2021 - Global Liquidity Hits Record Highs, Major Countries in Rate-Cutting Mode
Transition from Retail-Dominated to Institution-Dominated Market - Despite Overheating Signals, Institutional Buying Provides Solid Support for Downside
Currently, there are three core drivers pushing the Bitcoin market: 1) Global liquidity expansion, 2) Accelerated institutional capital inflow, 3) Cryptocurrency-friendly regulatory environment. These three factors are working simultaneously, creating the strongest upward momentum since the 2021 bull market. Bitcoin has risen approximately 80% year-on-year, and we believe there are limited factors that could disrupt this upward momentum in the near to medium term.
In terms of global liquidity, it is noteworthy that the M2 money supply of major economies has exceeded $90 trillion, reaching a historic high. Historically, the growth rate of M2 and Bitcoin prices have shown similar directional patterns; if the current monetary expansion continues, there is still significant room for appreciation (Chart 1).
Additionally, President Trump's pressure for rate cuts and the Federal Reserve's dovish stance have opened pathways for excess liquidity to flow into alternative assets, with Bitcoin being a major beneficiary.
Meanwhile, institutional accumulation of Bitcoin is occurring at an unprecedented pace. The US spot ETF holds 1.3 million BTC, accounting for about 6% of the total supply, while Strategy (MSTR) alone holds 629,376 BTC (worth $71.2 billion). The key point is that these purchases represent structural strategies rather than one-off trades. The ongoing purchases through convertible bond issuance by Strategy particularly signify the formation of a new layer of demand.
Furthermore, the executive order from the Trump administration on August 7 represents a game changer. Opening Bitcoin investment to 401(k) retirement accounts creates the potential to access a $8.9 trillion pool of funds. Even a conservative 1% allocation would mean $8.9 billion—about 4% of Bitcoin's current market value. Given the long-term holding nature of 401(k) funds, this development should not only help with price appreciation but also reduce volatility. This marks a clear signal of Bitcoin's transition from a speculative asset to a core institutional holding asset.
The Bitcoin network is currently restructuring around large investors. The average daily transaction count has decreased by 41% from 660,000 in October 2024 to 388,000 in March 2025, but the transfer volume per Bitcoin transaction has actually increased. High-value transactions from institutions like Strategy have expanded the average transaction size. This indicates a shift in the Bitcoin network from a "small frequent" to a "large infrequent" transaction model (Chart 2).
However, fundamental indicators show uneven growth. While institutional restructuring has clearly driven up the value of the Bitcoin network, transaction counts and active users have yet to recover (Chart 3).
Improvement in fundamentals requires activation of the ecosystem through BTCFi (Bitcoin-based decentralized financial services) and other initiatives, but these are still in early development stages and will take time to have a meaningful impact.
On-chain indicators show some overheating signals, but significant downside risks remain limited. The MVRV-Z indicator, which measures the current price relative to the average cost basis of investors, is at 2.49, in the overheating zone, recently spiking to 2.7, warning of a potential near-term correction (Chart 4).
However, the aSOPR (1.019), which tracks realized profits and losses of investors, and the NUPL (0.558), which measures the overall unrealized profits and losses in the market, both remain in stable ranges, indicating overall market health (Charts 5, 6).
In short, while the current price is relatively high compared to the average cost basis (MVRV-Z), actual selling occurs at moderate profit levels (aSOPR), and the overall market has not yet reached an excessive profit zone (NUPL).
Supporting this dynamic is institutional buying surpassing retail. Continuous accumulation from ETF and Strategy-type entities provides solid price support. A correction may occur in the near term, but a trend reversal seems unlikely.
Our TVM approach derives a target price of $190,000 through the following framework: we identify a base price of $135,000 (removing extreme fear and greed sentiment from the current price), then apply a +3.5% fundamental indicator multiplier and a +35% macro indicator multiplier.
The fundamental indicator multiplier reflects improvements in network quality—higher transaction value despite lower transaction counts. The macro indicator multiplier captures three powerful forces: global liquidity expansion (such as M2 exceeding $90 trillion), accelerated institutional adoption (such as ETFs holding 1.3 million BTC), and improved regulatory environment (such as the unlocking of $8.9 trillion in 401(k) eligibility).
From current levels, this implies a 67% upside potential. While aggressive, this target reflects the ongoing structural shift as Bitcoin transitions from a speculative asset to an institutional portfolio allocation.
Related: Bitcoin ETF Faces Five Consecutive Declines, Pomp Says BTC is Oversold
Original: “Q3 Bitcoin (BTC) Valuation Report: Three Key Drivers Fuel Rally, Institutions Target $190K”
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