Bitcoin’s Baffling Bearish Volatility: Why Institutions Keep Buying in October 2025
- Why Are Major Banks Suddenly Embracing Bitcoin?
- Is Bitcoin Becoming a Global Reserve Asset?
- What's Driving Institutional Demand Despite Volatility?
- Frequently Asked Questions
While Bitcoin's price swings continue to puzzle retail investors, major financial institutions are doubling down. From Morgan Stanley opening BTC investments to all 16 million clients to Russia's surprising crypto legalization, the institutional floodgates are wide open. This deep dive explores why Wall Street sees current volatility as a buying opportunity while retail traders panic.
Why Are Major Banks Suddenly Embracing Bitcoin?
The past week saw seismic shifts in institutional adoption. Morgan Stanley removed its $1.5M minimum for bitcoin ETFs, now allowing even retirement accounts to allocate up to 4% to crypto. "We're talking about unlocking $8 trillion in client assets," noted a BTCC market analyst. "This isn't speculative money - these are long-term portfolio allocations."
Meanwhile in Russia, where $300B in foreign reserves remain frozen, the Central Bank made an about-face. Deputy Finance Minister Ivan Chebeskov admitted 20 million Russians already use crypto, with platforms holding $10B in assets (62% Bitcoin). "We reached the point where legalization became inevitable," stated First Deputy Governor Vladimir Chistyukhin.
Is Bitcoin Becoming a Global Reserve Asset?
State Street's latest survey reveals institutions plan to double Bitcoin allocations from 3% to 6% by 2028. "Our analysis suggests this is just the beginning," said Donna Milrod, citing growing tokenization and regulatory clarity. The Luxembourg Sovereign Wealth Fund made headlines allocating 1% of its intergenerational fund to BTC.
Brazil's Parliament added fuel to the fire by rejecting an 18% capital gains tax on crypto payments under $6,500/month. Though the Central Bank still prohibits crypto payments, pressure mounts as retailers like Carrefour test Lightning Network integration.
What's Driving Institutional Demand Despite Volatility?
Three key factors emerge:
- Geopolitical Hedging: With US-China trade tensions escalating and Russia's SWIFT exclusion, BTC serves as a neutral reserve asset.
- Generational Shift: 27% of institutions report BTC delivers their portfolio's highest yields.
- Regulatory Milestones: The US "Bitcoin Act" strategic reserve and clearer tax policies reduce uncertainty.
As legendary investor Ric Edelman noted: "$500K Bitcoin isn't audacious - it's just 1% of global portfolios." With BlackRock, Tesla, and now sovereign funds accumulating, that 1% threshold looks increasingly conservative.
Frequently Asked Questions
Why is Bitcoin volatile if institutions are buying?
Institutional accumulation often occurs during downturns through OTC deals that don't immediately impact spot prices. Retail panic selling creates buying opportunities for large players.
How does Morgan Stanley's policy change affect Bitcoin?
By opening Bitcoin exposure to all 16M clients (vs just high-net-worth individuals), it significantly increases stable demand from retirement accounts and other long-term holdings.
What's the significance of Russia's crypto legalization?
With half its reserves frozen and 20M citizens already using crypto, Russia demonstrates how geopolitical pressures accelerate Bitcoin adoption as an alternative financial system.
