In recent years, there has been a growing interest among investors in Bitcoin as an alternative to traditional government bonds. This article examines the reasons and dynamics behind this choice.
Reasons for Choosing Bitcoin
Since the emergence of Bitcoin 13 years ago, its role as an alternative to bonds has become increasingly relevant among investors. This is linked to factors such as changes in the Federal Reserve’s monetary policy, high inflation rates, and instability in financial markets. Additionally, the dynamics of M1 and M2 money supply impact Bitcoin's attractiveness. These two metrics indicate the total amount of cash and savings in the economy and subsequently affect inflation rates and bond yields.
Rising Popularity of Bitcoin in Investor Portfolios
Since the SEC approved spot Bitcoin ETFs in January 2024, the market has witnessed a significant rise in interest from both institutional and retail investors. By mid-June 2025, the total assets under management of 12 spot ETFs reached $132.5 billion. This newfound popularity of Bitcoin in modern investor portfolios is supported by data indicating that an optimal allocation of Bitcoin in investment portfolios is around 16%.
Comparing Bitcoin and Sovereign Bonds
When comparing the risks and returns of Bitcoin and government bonds, it is noticeable that while returns from Bitcoin are not guaranteed, its price reaches record highs. For instance, Bitcoin's price hit an all-time high of $112,087.19 on June 10, 2025. In contrast, the yields on government bonds remain low, making Bitcoin more attractive to investors seeking higher potential returns.
Thus, there is a noticeable shift in investor preferences, with more people viewing Bitcoin as an alternative to traditional assets like government bonds. This transition may be driven by the desire to protect capital against inflation and to take advantage of the opportunities that Bitcoin offers.
