Bitcoin Merges with Traditional Finance | BTC Prague 2025 Panel

Institutional adoption of Bitcoin is no longer a distant dream — it’s happening now, and the conversations on the BTC Prague stage made that crystal clear. From UK pension schemes to Bitcoin-backed lending and nation-state reserves, the walls of traditional finance are coming down, one allocation at a time.

The Consultant Class Is the Gatekeeper

When we started adding Bitcoin to the list of asset classes available to our institutional clients at Cartrite, it opened up some genuinely fascinating conversations. But let me be honest — it’s not appropriate for every pension scheme. In the UK, many defined benefit schemes have very short time horizons. Some are handing over their entire portfolio to an insurer within months. So the first filter we applied was simple: if the time horizon is five years or more, they should be seriously considering Bitcoin.

One of the biggest hurdles isn’t the trustees or the investment officers — it’s the consultant class. Consultants are by nature reluctant to bless anything contrarian. The loop is well-worn: allocate to fixed income, equities, private equity, infrastructure, real estate — and that’s it. The moment you say “Bitcoin,” the response is often, “Well, no one else is doing it.” That’s precisely why consultants leading the charge matters so much. Once they move, the ball starts rolling.

Why ETPs Are the Institutional On-Ramp

When we founded what eventually became part of Bitwise, we always believed institutional investors would come — it just takes longer because they’re a slow-moving beast by design. They have investment committees, risk committees, layers of governance. The Bitcoin ETP solves a lot of that friction.

What makes an ETP attractive isn’t just simplicity. It’s familiarity. These are MiFID II regulated instruments in Europe, traded on regulated exchanges with daily volume and full regulatory oversight. Institutions can see a prospectus, analyse it, and understand the checks and balances built into the product. The conversations inevitably move to custody, then to portfolio construction — what does adding a 1–3% Bitcoin allocation do to the Sharpe ratio? What happens to drawdowns? Volatility is always raised, but it’s worth noting that Bitcoin’s volatility has been coming down over time, and it’s actually a feature, not a bug.

Bitcoin as the Ultimate Collateral

At Debify, what we’re trying to do is bring institutions into non-custodial, multisig lending setups — not just provide liquidity, but help them actually hold the keys to the collateral. And the demand is enormous, because Bitcoin-backed lending rates are still high, which means it’s a genuinely attractive yield opportunity for institutions sitting on fiat or stablecoin holdings.

Here’s the pitch I give to any institutional lender: Bitcoin is the most liquid collateral in the history of the world. If a borrower defaults on a real estate loan, you’re stuck going through courts, administration, months of process. With Bitcoin, you can liquidate collateral in seconds, 24 hours a day, seven days a week — Saturday night, Sunday morning, it doesn’t matter. Markets are deep and getting deeper. That’s what institutions want: highly liquid assets they can manage and even automate. On a long-term scale, Bitcoin is less volatile than high-risk equities, and that’s becoming more obvious every year.

Portfolio Construction and the Sleep-at-Night Test

For the pension scheme we worked with, the initial allocation was 3%. That might sound small, but being first matters enormously. The position had to pass the sleep-at-night test from both directions. If the price halved, they needed to be able to ride through it — not panic sell, which would be a disaster. So the allocation needed to be small enough to survive volatility. At the same time, if Bitcoin ran hard and the allocation grew to 20% of total assets, that’s also not a comfortable place for a pension trustee. We built in triggers to trim profits at certain thresholds.

From a pure efficient frontier perspective, traditional portfolio theory would suggest around 20–25% in Bitcoin. But you have to layer