10 Mar 2025|RESEARCH

Wall Street On-Chain Part 1 – Will Bitcoin be Another Asset?

Bitcoin has made a solid run in the past year to widen the gap between its performance against altcoins. It is also often described as ‘digital gold’ for being seen as a store of value and potential hedge against inflation. Based on its recent developments and adoption in institutions, this report explores if BTC could become another new asset and examines potential contenders to bitcoin.

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Executive Summary

Bitcoin is the pioneer of the cryptocurrency market, and has made a solid run in the past year to widen the gap against altcoin performance. The difference in performance between Bitcoin and altcoins has sparked the idea that Bitcoin could become another new asset beyond the ‘crypto assets’.
Compared to traditional assets like gold, Bitcoin’s stock-to-flow ratio (measures scarcity of an asset by taking existing reserves (stock) and dividing it by yearly production of the asset (flow)) has seen an exponential increase over the years due to halvings. This potentially suggests that Bitcoin may rival gold in terms of scarcity, supporting its status as ‘digital gold’. Recently, the correlation between Bitcoin and gold performance in the short term reached its highest level (0.52) since 2020, enhancing Bitcoin’s safe-haven character.
The performances of BTC and equity indices in 2024 don’t show stronger correlation than the performance between BTC and gold. This also suggests that Bitcoin’s performance doesn’t align with the stock market.
Large-cap altcoins like Ethereum, Solana, and XRP have also sparked the debate on whether they could follow Bitcoin’s footsteps in the near future.
- Gap in Market Cap and Trading Volume: The combined market capitalisation of ETH, XRP, and SOL as a percentage of Bitcoin’s market cap has been trending down in the past three years, and was at 28% by the end of February 2025. Bitcoin also generally has a higher trading volume than altcoins, reflecting the gap in size and liquidity.
- Institutional and Retail Adoption: Institutional investors favour Bitcoin more than ETH, and BTC’s global adoption trend was stronger than that of ETH, based on the growth of their user bases.
- RWAs and Stablecoins: Smart contract platforms, including Ethereum and Solana, are widely used in blockchain transactions, stablecoin issuance, as well as real-world asset (RWA) tokenisation. RWA tokenisation can be a driver for the mass adoption of altcoins.
Bitcoin has had a Lindy Effect (a concept that suggests the longer something has survived or been in use, the longer it is likely to continue existing in the future) that can be difficult to replace. It has survived through macroeconomic uncertainties and other challenges since its inception and still managed to retain its leading position, which reflects that Bitcoin has a higher chance to remain important and relevant.

1. Introduction

As the first cryptocurrency, Bitcoin was the pioneer of the entire cryptocurrency market, with a US$2.9 trillion market cap at the end of February 2025, becoming the 10th-largest currency worldwide. Bitcoin also takes the lead amongst the other crypto tokens (known as altcoins) in terms of market cap, with Bitcoin dominance reaching 59% at the end of February, according to CoinGecko.

Bitcoin is often described as ‘digital gold’ mainly due to some investors seeing it as a store of value and potential hedge against inflation. Based on Bitcoin’s recent development and its adoption in institutions, this report aims to explore if Bitcoin could become another new asset beyond the ‘crypto assets’ narrative.

2. Bitcoin vs Altcoins

While the Bitcoin and altcoin (other cryptos excluding bitcoin) market caps have generally followed a similar trajectory, Bitcoin has made a solid run in the past year, widening the gap against altcoin performance. In particular, Bitcoin’s market cap increased 50% in the last 12 months, while altcoins increased by 9%. This can be attributed to tailwinds, including the launch of US spot Bitcoin exchange-traded funds (ETFs), the notable impact of the US elections on the cryptocurrency landscape, and the completion of the Bitcoin network’s fourth halving.

In terms of correlation with other assets, the correlation between Bitcoin and large-cap altcoins saw a notable downtrend in recent months, while correlation between BTC and ETH generally remains strong between 0.6–0.8. Bitcoin’s correlation with Solana, however, has fluctuated within a larger range, and showed a notable downtrend. On the other hand, Bitcoin’s correlation with XRP is weaker than with ETH or SOL, with huge fluctuations in the past six months.

3. Bitcoin vs Traditional Assets

3.1 Bitcoin vs Gold

Bitcoin is often referred to as ‘digital gold’ because of its limited supply and similar ‘mining’ procedures; therefore, Bitcoin has the potential ability to act as an inflation hedge and store of value like gold.

One popular method to evaluate Bitcoin’s price is the stock-to-flow model (S2F), which was created by an investor known as PlanB and popularised in 2019. While it is not a formal theory, S2Fs calculate the scarcity of an asset (e.g., gold) with the below formula:

S2F = stock/flow, where ‘stock’ is the size of the existing reserves (the total supply already mined), and ‘flow’ is the yearly production of the asset. In other words, S2F calculates how many years are needed to produce the current stock. A higher stock-to-flow ratio is associated with a scarcer asset.

Gold’s S2F is high compared to other metals, including silver (S2F ratio of 22), giving gold the status as a store of value. While its S2F ratio has remained relatively stable, ranging from 50–60 in the past decade, Bitcoin’s S2F ratio saw an exponential increase in the past decade due to halvings, reaching beyond ~500,000 in 2024. This potentially suggests that Bitcoin may rival gold in terms of scarcity, supporting its status as ‘digital gold’.

It should be noted that there are a few identified pitfalls of S2F, including oversimplification of the price action and giving investors a “false sense of certainty” that the price will increase, as mentioned by Vitalik Buterin. In addition, some have criticised its assumptions, including how cointegration (the long-term relationship between two time series variables) does not hold in S2F.

Moreover, the correlation between Bitcoin and gold has undergone significant transformations over time, reflecting their distinct market behaviours and investor perceptions. This relationship has been particularly evident during periods of economic uncertainty and geopolitical instability. Recently, the correlation between Bitcoin and gold’s performance in the short term (30 days) reached its highest level (0.52) since 2020, enhancing Bitcoin’s safe-haven character.

On the other hand, Bitcoin is still more volatile than gold. The one-year rolling volatility of Bitcoin ranges from 40%–110% in the past nine years, while gold’s fluctuation is from 9%–20%. Thus, there are investors who cast doubt on whether Bitcoin can provide good downside protection in times of volatility. However, we do see the volatility of Bitcoin trending downwards over time compared to the earlier years; it is at 52% at the time of writing.

3.2 Bitcoin vs Equity

The performances of BTC and equity indices last year do not show stronger correlation than the performance between BTC and gold. This also suggests that Bitcoin’s performance does not align with the stock market.

4. Potential Bitcoin Contenders — Why or Why Not?

Large-cap altcoins like Ethereum, Solana, and XRP have recently gained in popularity and been discussed for their potential adoption as ETFs. They also sparked the debate on whether they could follow Bitcoin’s footsteps in the near future.

Gap in Market Cap and Trading Volume

The combined market cap of ETH, XRP, and SOL as a percentage of Bitcoin’s market cap reached ~66% in late 2021; however, it has been trending down in the past three years, and was at 28% by the end of February 2025.

Similarly, Bitcoin generally has a higher trading volume than altcoins, and its trading volume is generally higher than Ethereum, Solana and XRP. This reflects the gap in size and liquidity of Bitcoin versus altcoins, which is important for adoption (for example, in the context of traders executing large orders and investors managing portfolios).

Institutional and Retail Adoption

Bitcoin also leads in institutional adoption, with US spot Bitcoin ETFs having $37 billion in net inflows since their launch in January 2024, larger than the $2.8 billion of US spot Ethereum ETFs that launched in July 2024. In terms of assets under management (AUM) and volume, BTC ETFs recorded $101 billion and $780 billion, respectively, as of 28 February, ~14x and ~13x that of ETH ETFs ($7 billion and $58 billion, respectively).

In addition, the recent US elections have shifted the sentiment of crypto with the expectations of more crypto-friendly policies. One of them is the potential approval of more altcoin ETFs, evidenced by an increasing number of filings — including XRP, Litecoin, and Solana — and acknowledgement by the US Securities and Exchange Commission (SEC) around these ETFs. More investment options available may increase the capital flow and institutional adoption towards altcoins. However, looking at the trajectory and adoption of ETH ETFs, these altcoin ETFs may need some time to catch up with BTC.

On the retail adoption front, BTC’s global adoption trend was stronger than that of ETH, suggested by the growth of their user bases. Although the growth of Ethereum’s owners had an 84% compound annual growth rate (CAGR) compared with BTC’s 48% CAGR in the last four years, BTC’s slope of the trendlines is steeper than ETH’s, suggesting BTC’s potential strong adoption in the future.

RWAs and Stablecoins

Altcoin blockchains like Ethereum and Solana are widely used to issue stablecoins, taking up 54% and 5% of stablecoin total value locked (TVL), respectively, at the time of writing.

Stablecoins are widely seen as ‘digital money’, given they are often pegged against fiat currencies. They are commonly used to power various DeFi transactions, including transactions in decentralised exchanges, in lending and borrowing, as well as yield farming. Another role stablecoins play is in the realm of real-world assets (RWAs), where they are backed by tokenised tangible assets (e.g., treasuries and equities), enhancing liquidity and accessibility.

The market cap of stablecoins surged by 258% from April 2021 to February 2025, much more than BTC’s 53% in the same period. From the data, we can see that stablecoins and RWAs would be an important driver for the mass adoption of altcoins.

5. Conclusion

Bitcoin plays a unique role in the crypto world, and has a Lindy Effect. Bitcoin has seen its fluctuations in the past 16 years, surviving through macroeconomic uncertainties and other challenges, and has still managed to retain its leading position in terms of market cap, which reflects that Bitcoin has a higher chance to remain important and relevant in the future.

Outside of crypto, Bitcoin is also expanding its significance in the broader asset space, often benchmarked towards other asset classes and gold. We look forward to seeing more acknowledgement of Bitcoin as an asset, supported by upcoming tailwinds like more crypto-friendly policies and increasing institutional adoption.

Read the full report: Wall Street On-Chain Part 1 – Will Bitcoin be Another Asset?

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