An analysis said institutional investors' future demand for bitcoin could be driven by financial uses such as lending, collateral and treasury management.

Cointelegraph reported on Oct. 29 that bitcoin infrastructure developer RootstockLabs said bitcoin's role could expand beyond a store of value to income generation and corporate treasury operations.

RootstockLabs put the share of the current bitcoin supply used for lending and bitcoin-based finance at 1.5 percent, and estimated identifiable institutional holdings at about 3.9 million BTC. It said more active financial use of institutional holdings could spur additional demand without changing bitcoin's fixed supply structure.

The report presented 2 ways to use bitcoin. One is to earn returns on bitcoin holdings through lending and structured credit. The other is to raise efficiency in asset and liability management by combining fiat borrowing with bitcoin use. RootstockLabs said such uses could also strengthen incentives for institutions to buy bitcoin and hold it over the long term.

If institutional holdings doubled to 7.8 million BTC and 5 percent of that were deployed to earn 5 percent a year, total annual income would reach 19,500 BTC. It said this is not a forecast for new demand, but a calculation of potential income from using existing holdings.

The report also pointed to risks tied to financial use. Tony DiCarlo (토니 디카를로), director of institutional strategy at RootstockLabs, cited concerns such as borrower defaults, custody failures and the legal enforceability of contracts. He also acknowledged that bitcoin's price volatility could increase leverage risk.

Even so, DiCarlo assessed that the benefits of financial use could outweigh the risks. He cited a case in which mining firm Mara (MARA) used a $750 million bitcoin-backed loan as it pursued an acquisition of an Ohio power plant, saying it showed bitcoin could raise funds needed for real-asset investment without selling holdings.

He also cited custody concentration as a separate challenge as institutional adoption expands. DiCarlo said spot bitcoin exchange-traded funds have become a major channel for institutional inflows, but shareholders hold shares rather than coins. He said bitcoin custody could still be concentrated in a small number of large custodians even if institutional participation increases.

The report said it is meaningful in that it explains bitcoin's value not through expectations of price gains but through expanded financial use. It said whether institutional holdings can be linked to lending, collateral and treasury operations remains a key variable in broadening bitcoin's range of use.