Bitcoin seems to have long since entered the mainstream: More and more people and companies are investing in the cryptocurrency. But what is the true state of the digital currency’s promises?
When an anonymous developer under the pseudonym Satoshi Nakamoto mined the first block of the Bitcoin blockchain – the so-called Genesis Block – in January 2009, no one suspected that it would develop into a globally accepted cryptocurrency. 2025 could now be the year in which Bitcoin finally reaches the mass market – even if the cryptocurrency’s price is currently trending downwards again.
Created in the midst of the global financial crisis, the cryptocurrency was actually a reaction to the crisis-ridden banking system – with the goal of creating a decentralized, transparent, and cross-border payment system that is not controlled by central institutions such as central banks. Now, however, the cryptocurrency is increasingly becoming part of the financial industry. What began as a project by nerds is now also of interest to banks, asset managers, companies, and even governments. Therefore, Bitcoin is currently traded primarily as “digital gold” or as a speculative asset.
Bitcoin as an Investment
In fact, it is becoming increasingly easier to buy Bitcoin. As a private individual, you no longer even need to be a customer of a special crypto exchange; you can buy and sell coins directly with neobanks such as Trade Republic, N26, or Revolut. In Europe, there is already legislation in place, the Markets in Crypto Assets Regulation (MICAR), which provides customers with greater security.
The US government under Donald Trump also now wants to deregulate the market and further open it up to traditional financial institutions. After the Securities and Exchange Commission (SEC) took a rather restrictive approach to the industry in recent years, the Trump administration is openly promoting cryptocurrencies. SEC lawsuits against major companies have already been dropped.
The SEC has also made it easier for banks to hold crypto assets by revoking a strict accounting policy. The Federal Deposit Insurance Corporation (FDIC) has also just clarified that US banks do not need special authorization to experiment with new technologies such as cryptocurrencies and digital assets, allowing them to manage the associated risks.
In the US, 28 percent of adults already own cryptocurrencies, a share that has doubled since 2021. For around two-thirds of cryptocurrency owners, Bitcoin remains the preferred digital currency.
Skeptics have so far been deterred primarily by Bitcoin’s sharp price fluctuations, as highs are often followed by significant losses. Some investors may not have forgotten the recent scandals and collapses of crypto exchanges – such as the spectacular FTX case – which raise fundamental questions about the security of the industry.
Bitcoin ETFs: Review after One Year
However, the cryptocurrency experienced a major price boost last year when the SEC approved spot ETFs (Exchange Traded Funds), which simplify access, especially for institutional investors. Summary after one year: 12 spot Bitcoin ETFs have been approved; in addition to companies from the crypto industry, these are also offered by traditional asset managers such as Blackrock and Fidelity.
At the beginning of April, the ETFs managed a total of approximately 1,127,632 Bitcoin, equivalent to a value of approximately $86.76 billion and approximately 5.37 percent of the total available Bitcoin supply. In addition to investors who invest indirectly in Bitcoin through the ETFs, companies such as MicroStrategy, Tesla, and Block also use Bitcoin as a store of value, which also injects more capital into the market.
MicroStrategy alone now holds more than 528,000 Bitcoin, representing approximately 2.6 percent of the total in circulation. Chairman and major shareholder Michael Saylor, an avowed Bitcoin fan, is pursuing a rather risky strategy, however, and has taken on large amounts of debt with the company to buy Bitcoin—a kind of ultimate bet on rising prices.
Governments also want Bitcoin
US President Trump has also ennobled Bitcoin with his plan to build a government reserve from the Bitcoin that US authorities seized during investigations. In addition, there are plans to store other digital currencies such as Ethereum and Solana in a separate inventory from Bitcoin.
However, the Bitcoin price reacted less enthusiastically to the announcement than expected. Investors were apparently disappointed; they had expected more. The acquisition of additional Bitcoin for the planned reserve is to be carried out without the use of taxpayer money. The US government will therefore not purchase Bitcoin directly. A Republican bill had previously suggested a different approach: According to Senator Cynthia Lummis’s proposal, a total of one million Bitcoin would be acquired over a period of five years. However, President Trump never directly commented on this plan.
The Czech central bank is also already considering a Bitcoin reserve. The European Central Bank, on the other hand, has already made a clear statement about such an idea. ECB President Christine Lagarde recently stated that it is “confident” that “Bitcoin will not be included in the reserves of any of the central banks of the ECB members.” Reserves must be “liquid, safe, and secure” and “not subject to suspicion of money laundering or other criminal activity.”
Not such a safe haven
Analysts at Morgan Stanley warn, however, that Bitcoin has currently lost its reputation as a safe haven. The cryptocurrency’s performance often reacts to macroeconomic events, with inflation figures and economic forecasts being reflected in its price. The price often correlates with the performance of tech stocks on the stock market.
This is also demonstrated by the current price slump: After Donald Trump announced very high tariffs on many economic partners last week, the stock markets are in turmoil. On Monday, the US S&P 500 index, as well as the German leading index, the DAX, again opened with losses.
Although cryptocurrencies had been more stable in the first few days following the tariff announcements, they then followed the downward trend. The Bitcoin price temporarily fell below the $75,000 mark on Monday. This means that the cryptocurrency has lost almost all of the gains it had achieved after Donald Trump’s election as US president. Following Trump’s election victory, the world’s oldest cryptocurrency initially rose to over $75,000, and at times even over $100,000.
Bitcoin ETFs have also seen significant outflows recently, with over $200 million flowing out of them last week, according to Coinshares. US stock market analyst Harry Dent even sees the danger of a severe Bitcoin crash. Bitcoin is certainly not (yet) a safe haven.
Unsuitable as a means of payment?
Not everyone shares the vision of Bitcoin establishing itself as “digital gold,” i.e., a stable digital currency in times of crisis. Jack Dorsey, CEO of Block and co-founder of Twitter, recently warned in a podcast that the current focus on Bitcoin as a store of value is “paving the way to irrelevance.” Bitcoin must be relevant for everyday use, i.e., usable as a means of payment, to be used not only in emergencies or when liquidity is needed. Currently, however, many Bitcoin owners view the cryptocurrency primarily as an investment and hope for rising prices – which hampers its practical use.
Other digital currencies have a much better chance of becoming established in everyday life. For example, the US administration under Trump is pushing forward a regulatory framework for stablecoins. Their major advantage: Unlike Bitcoin, these digital currencies are tied to a fiat currency such as the dollar or the euro and are therefore stable in value.
According to a report by a16z, dollar stablecoins such as USDT are already more successful in practical use than Bitcoin. Tether’s stablecoin is ahead of BTC in both the number of transactions and transaction volume: USDT transactions totaling $93 billion are conducted daily, compared to only $52 billion for Bitcoin. If the Stablecoin Act is passed, uncertainties regarding the security of stablecoins should be eliminated.
Issuers in the US will also be required to collateralize stablecoins with dollars at a ratio of 1:1 and to regularly prove their holdings – which should increase confidence in digital currencies.
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