Sovereign Wealth Funds Bet on Bitcoin as Gold Alternative, Says Coinbase Institutional Strategist

Institutional Demand and Sovereign Funds, Not Retail, Behind Bitcoin’s April Rally, D’Agostino Tells CNBC

Sovereign wealth funds — state-owned investment pools managing national savings — are increasingly viewing bitcoin (BTC) as a strategic asset, D’Agostino told CNBC. Their participation signals growing institutional confidence in cryptocurrency’s role in modern finance. These entities, which collectively oversee trillions globally, could reshape bitcoin’s market dynamics through large-scale, long-term holdings.

D’Agostino cited three factors behind the trend. First, de-dollarization fears have escalated following U.S. tariff announcements in early April, prompting funds to diversify away from dollar-denominated assets. “If you believe that’s going to have a spillover effect on global trade—if you believe there’s going to be less global trade, much of which is denominated in U.S. dollars—then you’d expect lower demand for U.S. dollars,” D’Agostino told the CNBC show host Andrew Ross Sorkin.

“That’s what we refer to as de-dollarization. Well, one of the ways bitcoin is used by these large pools of capital is they buy it with their local fiat currency, hold it, and sell it into dollars when needed,” D’Agostino continued. Second, he remarked that bitcoin is decoupling from tech stocks after being bundled into the levered tech trade post-Covid-19. Finally, institutions see bitcoin as a gold-like hedge amid inflationary pressures, with its scarcity and non-sovereign status offering unique appeal.

Notably, D’Agostino remarked that bitcoin exchange-traded funds (ETFs) saw $470 million in net outflows in April, even as direct purchases by institutions pushed bitcoin’s price up 13% — outperforming gold’s 10.5% gain. D’Agostino emphasized this divergence: “Institutions, sovereigns, and patient pools of capital were piling in during April.” Sovereign funds’ opaque reporting practices make their exact ETF participation unclear, but their influence is evident in spot market activity.

Bitcoin’s fundamentals — including its fixed supply and mining difficulty adjustments — align it with gold as a hedge, D’Agostino noted. Traders seeking alternatives to crowded gold positions are turning to bitcoin, which he said, “There’s a very short list of assets that mirror the characteristics of gold.”

While quite cautious about extrapolating short-term trends, D’Agostino highlighted sovereign funds’ potential to stabilize bitcoin’s valuation. Their sustained accumulation could mitigate retail-driven volatility, positioning bitcoin as a mainstream institutional asset.

This dual approach mirrors historical trends in gold, and according to Bitwise Chief Investment Officer, Matt Hougan, who recently said: “People own gold ETFs, and they own gold bars. The same thing is gonna be true here in crypto.” Hougan added that while sovereigns may prioritize direct purchases for control, ETFs offer a “faster, easier button” for exposure. “They’ll end up buying both,” he predicted.