In early February, President Donald Trump announced the creation of the first U.S. sovereign wealth fund. Early into his second term, his actions have led to a noticeable uptick in excitement surrounding the cryptocurrency system, lighting the fire of speculation regarding the potential for the U.S. to purchase cryptocurrencies and dominating the latest crypto news.
Whether this sovereign wealth fund will make significant purchases in the area of Bitcoin remains to be seen. The fund itself won’t be operational until the end of 2025 or possibly early 2026. Despite this, excitement and speculation work in tandem to highlight overall interest in Bitcoin and other cryptocurrencies.
What is a Sovereign Wealth Fund?
To understand the move, we must first understand what this fund is. A sovereign wealth fund is state-owned, an investment fund that is generally fed through budget surpluses. According to a study by the International Forum of Sovereign Wealth Funds, almost 100 sovereign wealth funds exist globally, possessing nearly $9 trillion in assets collectively.
Roughly 45% of those funds came from revenues generated from natural resources. The majority, however, come from commercial surpluses. The funds within then get reinvested across different asset classes like bonds, real estate, stocks, and more, the goal being to benefit the residents of the nation. Think long-term and with a focus on stability.
The strongest sovereign wealth fund belongs to Norway, which had a profit of €213 billion in 2024 alone. China and Abu Dhabi are just behind Norway with the overwhelming majority of these funds coming from the Middle East or Asia.
The first North American entity on the list of the largest sovereign wealth funds comes from Alberta, a Western Canadian province.
The Pairing of Sovereign Funds and Crypto
Though so many nations previously had sovereign funds, only a few of them have ventured into direct investments in Bitcoin or altcoins prior to the last few weeks. Bhutan’s sovereign fund, ranked 76th globally, held 10,635 BTC by the end of February 2025 with a value of well north of $1 billion.
In April 2019, the Himalayan kingdom made a big leap into the crypto space, launching its own Bitcoin mining program. This made it one of the very fist nations in the world to fully bet on cryptocurrency. It didn’t take long for El Salvador to follow, though the fund wasn’t a traditional sovereign wealth fund.
In recent months, more sovereign funds are starting to gain exposure to the world of crypto. Bitcoin Spot ETFs in January 2024 also played a major role, specifically in the acceleration of sovereign funds interacting with cryptocurrencies.
Individual states are even getting in on the action. Wisconsin’s sovereign fund was one of the very first to move toward infesting in Spot ETFs, doing so through iShares Bitcoin Trust ETF. It currently holds six million shares, with an approximate value in February 2025 of $321 million.
As of February 2025, Mubadala Investment Co., the sovereign wealth fund of Abu Dhabi, had successfully followed suit. It acquired 8.2 million shares of iShares Bitcoin Trust ETF, worth more than $436 million as recently as Feb.18, 2025.
Institutions Adopting Bitcoin
Several sovereign countries like Bhutan and El Salvador have already adopted their own Bitcoin reserves, purchasing Bitcoin actively. State governments and municipalities have already begun implementing policies and proposing legislation in order to accumulate Bitcoin. The goal is to protect the purchasing power of treasuries from actively tanking the value of fiat currencies.
Strategy and Michael Saylor, collectively known as MicroStrategy, started the trend of a corporate Bitcoin treasury. Major companies from across the globe are now following that trend.
A Major Boost in Holdings by Institutional Investors
In addition to sovereign wealth funds, major insurance pools and large institutional investors increased their collective exposure to Bitcoin (BTC) by 13%. The shift comes from evolving financial conditions, but also from macroeconomic changes. This comes according to John D’Agostino, Coinbase’s institutional head of strategy.
D’Agostino had previously explained that there are three major factors that played an impact on institutional flows into Bitcoin over the last month. The aforementioned factors include a reassessment of Bitcoin’s identity as it relates to technology equities, de-dollarization trends, and the role of Bitcoin when it comes to acting as an alternative inflation hedge.
D’Agostino emphasized that these inflows come from long-duration capital like insurers and sovereign wealth funds rather than speculative or retail actors. All of this was spurred on by recent U.S. tariffs, prompting discussion about the durability of the U.S. dollar.
After reassessing their holdings of US dollars – through gold or other reserve assets – these institutions opted to increase their direct exposure to Bitcoin. Bitcoin is seen as a non-sovereign store of value that could be potentially used as a hedge in situations where the demand for US assets declines. It could mirror larger de-dollarization themes, even gaining traction with market policymakers and some reserve managers over the last few years.
Bitcoin ETFs
It is interesting to note that Bitcoin exchange-traded funds (ETFs) remained a net negative in April, institutional purchases did not slow. Persistent buying activity from patient capital allocators was observed by the exchange Coinbase despite the aforementioned movement. Long-term holders have also been acquiring spot Bitcoin, particularly in market retreat periods, essentially decoupling ETF outflows and price strength.
Regardless of retail net selling, Bitcoin saw a roughly 13% monthly gain. This has much to do with the fact that institutional buyers see Bitcoin as an inflation hedge. The more BTC decouples from leveraged tech trades that would have otherwise distorted its behavior, the core attributes – immutability, non-sovereign control, portability, and the fixed supply – are becoming more of a focal point behind the renewed investment.
D’Agostino noted that Bitcoin is often appearing alongside real estate and gold when it comes to the five best assets used in multi-year inflation hedge models that global traders are developing. Increasing institutional conviction regarding Bitcoin’s role as a suitable strategic reserve asset continues.
Final Thoughts
Over the last few years, in particular, most institutional perspectives as it relates to cryptocurrencies, not just Bitcoin, have evolved. Bitcoin Spot ETFs launched in January 2024 and acted as a turning point, giving investment funds the direct exposure to Bitcoin needed without a reliance on exchanges.
Some sovereign funds have already seen substantial gains from this opportunity. Many funds, however, are taking a cautious approach. All that said, the pace of Bitcoin adoption is increasing at a steady pace.
The limited supply of Bitcoin, plus its decentralized structure, makes it a potentially safer asset over the long term compared to more traditional investment types. Bitcoin’s stance as a hedge against economic and geopolitical uncertainties is becoming more commonplace as well.
Gold has long been the safe-haven in terms of investment assets, but Bitcoin is moving in that direction. With signs that the U.S. will be heavily invested in Bitcoin, there could be something of an arms race to acquire and stockpile what is already a scarce digital asset and use it to become a global economic force in the digital space.
