Bitcoin for Institutions: The Experts

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TL;DR: In an interview with Brian Hirschfield and André Dragosch, experts discuss Bitcoin’s rise as an institutional asset. They highlight its potential as a safe haven, the role of spot ETFs, and risks like custodial mismanagement and quantum computing. Institutions should start with low allocations via ETFs, focusing on long-term value over volatility.

2025 is fast becoming the year of the Bitcoin business book. Ricardo Salinas, Michael Saylor (compiled by Anil Patel), Anthony Scaramucci, and others have all published books this year. The institutional investors are here, and I wanted to dig deeper into ‘institutional’ Bitcoin and where we are headed.

• Are ETFs the turning point for Bitcoin to become a safe haven for capital?
• Which types of institutions should buy Bitcoin, and how should they start?
• Are treasury companies good actors, or are they this cycle’s ICOs?

I sat down with two experts in the space who have contributed to the growing corpus of Bitcoin business books. Brian Hirschfield is a seasoned financial professional with over 30 years of experience managing risks for the world’s largest and most complex financial systems. As a former actuary and risk management expert, he has witnessed firsthand the failures of traditional financial institutions and their reluctance to adopt sound advice. In 2025, Brian published Bitcoin for Institutions, a roadmap for companies to engage safely and successfully with the world's most powerful emerging asset. André Dragosch is the author of Exponential Gold: An Institutional Investor's Guide to Bitcoin & Cryptoassets. He has been working for more than 10 years in the German financial industry, mostly in portfolio management and investment research. He is a Director and Head of Research at Bitwise, Europe.

Interview

Hi both. Thank you for joining me today. Bitcoin books were instrumental in ‘orange-pilling me’. Now I even write and edit them. What was the "aha" moment that convinced you Bitcoin was not just a passing fad but a legitimate asset class worthy of serious risk analysis?

Brian Hirschfield (BH): I had never taken Bitcoin seriously enough to even view it as an asset until 2021, when I saw people fleeing their countries to avoid tyrannical vaccine mandates. For me, the investment thesis is that it will have endless demand for people seeking freedom in an increasingly tyrannical world. I was sold without even knowing about the 21 million cap.

André Dragosch (AD): When I finished reading Saifedean Ammous’ book The Bitcoin Standard in 2018. That was the moment I realized that Bitcoin is much more than just a new payment technology, but could evolve into a new basis for the global financial system.

How has your background shaped your approach to understanding and valuing Bitcoin?

BH: At many points in my career, I realized the actuarial curriculum was insufficient for the mastery of financial risk, so I studied what was needed, whether it was investments, economics, or advanced math. When Bitcoin came along, it was natural to feel the need to understand everything I possibly could about it and how it fits into the current system we live in.

AD: I think my view on Bitcoin is somewhat macro-heavy due to my previous professional research roles, but also informed by monetary history due to my PhD studies in financial history.

André, Bitcoin has been a niche topic for a long time. What motivated you to write your book and try to bridge the gap between this new technology and the traditional finance world?

AD: There are still too many misconceptions about Bitcoin among traditional investors, so my book tries to address this. We are most likely at the chasm from early adopters to the early majority, where growth starts to accelerate and even becomes exponential. So, there will be an accelerating demand for education about Bitcoin.

And you, Brian. Why write a Bitcoin business book?

BH: I was very cynical that institutions would ever understand how to execute a Bitcoin strategy. I viewed institutions as inferior entities with regard to holding Bitcoin long term, but I concluded that if I wrote an entire book, I could help any company that sincerely wants to use Bitcoin.

What do you believe is the single biggest misconception that institutional investors, or corporations, have about Bitcoin today?

BH: The only way to participate in Bitcoin is to buy it and put it on their balance sheets. My book presents a deep playbook across a spectrum of risk that includes far less risky endeavors than buying and holding Bitcoin.

AD: Based on my personal interactions with institutional investors, Bitcoin’s high volatility: The truth is that Bitcoin’s volatility has been declining structurally and is now on par with major assets such as US equities. Oh, and also its lack of ‘intrinsic value’. Unlike conventional fiat monies, Bitcoin needs physical energy to be created, which is why it is scarce in the first place.

From your perspective, what is the most significant risk that is still unpriced in the Bitcoin market?

BH: The most significant risk nobody talks about is that of qualified custodians mismanaging the cryptographic keys of large concentrations of institutional holders like BlackRock and Strategy that could lead to a total loss of significant mark-to-market value. FASB does not currently require any company to prove they can spend their Bitcoin before declaring its value on their balance sheet.

AD: I think the most significant risk for Bitcoin probably stems from a further advancement in computing technology, especially quantum computing, over the longer term, which could create a short window for a malicious attack on the network. That being said, I do believe that quantum computing will ultimately make the network even safer when the technology is widely adopted among Bitcoin miners.

What is a key insight from your work that you believe would surprise most people?

AD: One of the key insights from my new book Exponential Gold is that Bitcoin is a macro asset. From a pure statistical point of view, four macro factors — global growth, monetary policy, US Dollar, and Eurozone risks — can already explain more than 80% of the performance variation of Bitcoin since 2015. I expect Bitcoin’s sensitivity to these macro factors to increase even further in the future due to the increasing institutional adoption and integration into the global traditional financial system.

BH: The most powerful insight in the book that still nobody has picked up on is how BlackRock is a good actor and their incentives will continue to keep them as good actors until their Bitcoin mission is accomplished, which I believe to be the complete replacement of bonds with Bitcoin in their client portfolios.

How has the market's liquidity and depth changed since the spot Bitcoin ETFs were approved?

AD: The migration of transaction volumes off-chain away from the core network to traditional exchanges, essentially via ETPs (Exchange-Traded Products). At some point in early 2024, the number of trades in Bitcoin ETPs worldwide was even higher than the total amount of on-chain Bitcoin transactions. The latest percentages are still around 60%. Investors and especially traders have moved off-chain mostly for economic reasons because transaction fees are lower when trading in ETPs, and also better integration with their traditional financial infrastructure, like brokerage accounts.

Do you believe Bitcoin has become a pro-cyclical asset that performs well during periods of risk-on sentiment, or is its "safe haven" narrative still relevant?

BH: Bitcoin is the ultimate safe-haven asset for long-term savers. Bitcoin naturally has no counterparty risk, no debasement risk, no seizure risk, and no risk of being censored upon spending it. There has never been an asset that protects savers from so many hazards. The price of this risk removal is an acceptance of volatility in the form of an occasional large drawdown that always finds new all-time highs.

AD: In general, I do think that Bitcoin still remains a pro-cyclical risk-on asset, since it’s geared towards changes in global growth expectations, which tend to cycle with cross-asset risk appetite as well. That being said, market regimes are changing dynamically all the time, and we have already seen market regimes where Bitcoin managed to decouple from overall risk sentiment and behaved counter-cyclical to traditional risk assets like US equities. Over the long term, the risk character of Bitcoin will most likely continue to change, and Bitcoin will probably transition from a risk-on asset to a safe-haven asset over time.

What metrics do you personally monitor to gauge the health of the Bitcoin network and the market?

BH: I look at 1) Hash rate, which connotes economic activity to mine Bitcoin; 2) consistency of 10-minute blocks, which speaks to the overall health of the network; and 3) price volatility, which is the lifeblood of a traded asset. The protocol is the most important thing to work properly, but the asset price having high volatility is a sign of a highly engaged market with many diverse interest groups (buyers, sellers, traders) all doing their job.

AD: I monitor four main areas to gauge Bitcoin’s health:

1. Network activity: growth in active addresses, transactions, and fee revenue.
2. Supply dynamics: declining exchange balances and rising long-term holder supply.
3. Mining fundamentals: hash rate, difficulty, and miner revenues relative to history.
4. Valuation: cost of production, MVRV ratio, and scarcity metrics like stock-to-flow.

André, what do you see as the primary benefit of a spot Bitcoin ETF for the average investor?

AD: The main benefit is simple, regulated access. Investors can gain exposure to Bitcoin without dealing with wallets, custody, or exchanges. It allows Bitcoin to fit seamlessly into existing brokerage and retirement accounts. This lowers barriers to entry and accelerates broader adoption within traditional portfolios.

Do you agree, Brian?

BH: Most people have money trapped in qualified vehicles like 401(k) plans, and they need to direct those funds into the best assets possible. Investors looking strictly for returns, and not some superior form of money, will benefit greatly from the spot ETF, which gives people access to Bitcoin’s returns without requiring them to interact with the protocol.

What are the pros and cons of a company or institution gaining Bitcoin exposure through an ETF versus holding the asset directly on its balance sheet?

BH: The pros are getting access to Bitcoin’s exposure without having to deal with the monetary difficulties, like custody. It takes an organization a long time to ensure its custody won’t subject it to a risk of a total loss from mismanaging the cryptographic keys. An organization can participate in Bitcoin’s returns while it learns to use the protocol. The cons are that the ETF contains a boatload of risks distinct from Bitcoin, like counterparty risk and 3rd party custodial risk. In addition, an institution will not increase its understanding of Bitcoin simply by holding the ETF, and will be much more likely to sell before the asset pays off.

AD: An ETF offers simplicity, regulatory clarity, and professional custody. Holding Bitcoin directly provides sovereignty and true scarcity exposure, but it requires secure custody solutions and operational expertise.

With so many different Bitcoin ETFs and ETPs available globally, what should an investor look for when choosing a product?

BH: If the objective is strictly USD returns, they should just pick the vehicle charging the lowest fee. If they are hedging, they should look at which products track the price the best and most reliably. If they are building towards a long-term strategy of holding their own Bitcoin, they should evaluate the counterparties offering the various ETFs and consider those that offer in-kind redemptions.

AD: Key factors are cost, liquidity, and custody. Low fees matter for long-term exposure. High trading volumes reduce slippage and improve execution. Transparent custody, cold storage, and proof of reserves ensure the product truly holds the underlying Bitcoin.

The regulatory landscape around Bitcoin financial products in Europe has differed greatly from the United States. André, you’re based in London at Bitwise Europe. What differences do you see?

AD: Europe allowed physically backed Bitcoin ETPs years before the U.S. approved spot ETFs. This gave European investors earlier access through regulated exchanges. The U.S. has moved slower due to securities law debates and regulatory fragmentation. As a result, Europe has been ahead in product innovation, while U.S. approval unlocks much larger pools of institutional capital.

Brian, as you’re based in the US, what’s your take?

BH: Europe, mainly within the EU, has been hostile to Bitcoin. Capital controls and legislation banning mining and self-hosted wallets have greatly disincentivized companies from operating in Europe. The US has been largely hostile as well, particularly under the Biden administration and Operation Chokepoint, but that is beginning to change under President Trump. The recent Blanche memo from the Trump DoJ is explicit guidance that software developers aren’t responsible for the actions of their users. However, the SDNY prosecution of software developers like Samourai Whirlpool and Tornado Cash still has a chilling effect on developers who wish to operate in the US.

Let’s talk about 2025’s biggest Bitcoin revelation — treasury companies. What’s your view on the "Bitcoin-per-share" metric championed by treasury companies like Strategy and Metaplanet?

BH: These metrics are a good start, but they are far from what is needed. The metric and optic problem that Bitcoin-based assets have is that financial statements under GAAP all use present value for the valuation of every component of a company’s balance sheet and income statement. Present value disproportionately favors bonds, making them look more valuable than Bitcoin in exactly the scenarios where the opposite is true. This distorted metric has incentivized generations of borrowing and is likely the culprit for the US debt spiral we are experiencing now. MNAVs and BTC-per-share are the minimum optics needed to judge treasury companies, but they aren't helping the world fairly value Bitcoin against fiat assets.

André, is Bitcoin-per-share a valid way to measure value creation?

AD: It is probably a rather limited view on value creation for shareholders by focusing on maximizing Bitcoin-per-share only. The reason is that Bitcoin-per-share can be expanded via different financing vehicles that can potentially worsen the company’s financial position via higher liabilities, such as preferred equities or debt instruments, which ultimately increase the bankruptcy risk. Investors should therefore look at different metrics as well, such as BTC Torque or BTC Rating, in order to gauge the corporate financial health of the company.

For a young retail investor who has a long time horizon, what is your single most important piece of advice?

AD: Adopt a long-term mindset and stay patient. Volatility is normal, but time in the market has historically rewarded conviction. Allocate prudently, avoid leverage, and focus on accumulation. Hold through cycles and let Bitcoin’s scarcity and adoption work in your favor.

BH: 1) Read my entire book, especially the sections on why Bitcoin goes up and down; 2) Avoid leverage and unsecured debt entirely, and be very judicious about going into secured debt; 3) Live well below your means and commit a significant portion of your savings to Bitcoin — enough to ease your discomfort about the future, but not so much that you worry about paying your rent.

For a pension fund or endowment, what is the best way for them to begin their journey into Bitcoin?

BH: My book covers this strategy in great detail, particularly from the way BlackRock is rethinking Modern Portfolio Theory. Bitcoin is superior to bonds at every turn, with the exception of the relative severity of the drawdowns when they happen. A traditional 60/40 fund should take the 40% out of bonds now and put it into Bitcoin. They should also consider loading their equity allocation into funds that are “enhanced” with Bitcoin. Pensions and endowments have the perfect combination of medium-term time horizon and lack of regulatory requirements and taxation, that they should be pushing the highest Bitcoin allocations of any institutions.

AD: Start small with a low single-digit allocation. Use regulated vehicles like spot ETFs or institutional custody solutions for simplicity and compliance. Treat Bitcoin as a diversifier and potential hedge against monetary debasement. Focus on education, governance, and gradual scaling rather than tactical trading.

In a world of increasing financial complexity, do you believe Bitcoin simplifies or complicates an investment portfolio?

BH: Relative to an investment portfolio containing mostly bonds, it is night and day. Bitcoin simplifies things. Bitcoin (if you own it outright) has no counterparty risk, no debasement risk, and is open 24/7/365. Unlike bonds, there exists an ETF that is required by law to track the price perfectly. You can forget about duration analysis, term structure analysis, option spread analysis, and counterparty credit analysis, all of it. You can forget about corporate credit, mortgage credit, asset-backed credit, currency risk, all of it. With Bitcoin, there is only one thing to track, which is the operational risk of mismanaging the cryptographic keys. Nothing else.

AD: Bitcoin ultimately simplifies a portfolio. It is a single asset with absolute scarcity and global liquidity. It reduces reliance on complex hedging strategies against inflation and currency debasement. Its volatility complicates the short term, but the long-term role is straightforward: a hard monetary asset.

Final question: If an investor is only going to read one thing about Bitcoin, what do you suggest?

BH: I should suggest my book, Bitcoin for Institutions, but if I’m being completely honest, I would have to recommend Only the Strong Survive by Allen Farrington and Anders Larson. That essay provides the definitive case for Bitcoin above all other investments and a rubric for how to assess the viability of the various blockchain tokens masquerading as technology projects.

AD: If you’re running a pension fund, read Exponential Gold — it’s written in your language. If you’re just stacking sats on the side, grab The Bitcoin Standard — it’s the retail starter pack. One’s the manual for boardrooms, the other’s the red pill for the everyday saver. Pick your lane, but read the right book.

Thank you so much for your answers, gentlemen. I’ve certainly gotten a deeper understanding of how institutional investors can use Bitcoin. I hope the readers found your insights as enlightening as I have.