Major institutional investors did not sell as bitcoin underwent a sharp correction from $125,000 to $60,000. Some institutions instead increased their holdings, highlighting a trend of viewing bitcoin as a long-term asset allocation tool rather than a short-term trading target.

Bitcoin Magazine reported on Sept. 29 that Bitwise research head Ryan Rasmussen introduced Bitwise's first institutional crypto adoption report. He said pension funds, foundations, endowments and sovereign wealth funds see bitcoin, alongside gold, as an asset to guard against currency value dilution.

Rasmussen said none of the 15 major institutions Bitwise interviewed sold during the price decline. He said a substantial number increased their bitcoin holdings during the correction. The case is seen as showing institutions are approaching bitcoin from a long-term asset allocation perspective rather than focusing on short-term price swings.

Institutional portfolio weights were also mentioned. Rasmussen said Wells Fargo keeps bitcoin at about 2 to 3 percent of its portfolio, based on a rationale of responding to currency value dilution.

Fidelity and BlackRock were also cited as having bitcoin allocations of about 2 to 8 percent. Bitwise said the moves align with a trend of incorporating bitcoin as a long-term strategic asset rather than a short-term risky asset.

The role of spot bitcoin ETFs also stood out in this correction. Rasmussen said ETFs helped make the recent decline milder than in the past. He mentioned weekly net ETF inflows of about $2.5 billion and said new money is flowing into the market. He said spot ETFs have increased access to bitcoin for institutions and traditional finance, creating a structure that can draw new funds even during a correction.

Bitwise also offered its own view on a downside level for bitcoin prices. Rasmussen said Bitwise sees about $60,000 as the low for this correction.

He also stressed that bitcoin shows low correlation with traditional assets such as bonds, gold and stocks. He said adding bitcoin to institutional portfolios can be expected to improve diversification through different price movements from existing assets.

Rasmussen cited sovereign wealth fund moves as an example showing the potential expansion of institutional demand. He mentioned that some sovereign wealth funds are selling gold and buying bitcoin.

Not all institutions are replacing gold with bitcoin. Bitwise said many institutions hold both gold and bitcoin as a way to prepare for currency declines or asset dilution.

The key point in this case is that institutions' investment rationale did not change immediately in response to short-term price swings even as bitcoin prices fell sharply. The analysis said broader access through ETFs and strategic institutional asset allocation are interacting, and the bitcoin market's supply-demand structure is changing from the past.

Bitwise said institutions view bitcoin as a hedge similar to gold while also focusing on its low correlation with traditional assets. Interest is growing in how institutional and sovereign wealth fund inflows could affect market supply and demand during price corrections if their bitcoin allocations expand.