History of Bitcoin Part 3: Institutional Era to ETF Approval (2018–2026)

The period from 2018 to the present marks Bitcoin's difficult but definitive transition from a retail-driven speculative asset to an institutional-grade financial instrument. This era was defined by harsh bear markets that purged excesses, the pioneering entry of corporate treasuries, the failure of centralized crypto empires, and the ultimate validation by Wall Street's largest players.

While the first decade of Bitcoin established its technical resilience and monetary principles, this more recent chapter tested its social and financial endurance. It weathered a global pandemic, nation-state adoption, the collapse of its largest exchanges, and finally, integration into the world's most sophisticated financial markets. This is the story of how Bitcoin went from the fringe to the forefront of global finance.

The 2018 Bear Market and Institutional Seeds

The euphoria of the 2017 bull run, which saw Bitcoin's price surge from under $1,000 to nearly $20,000, came to an abrupt halt in early 2018. The subsequent bear market was prolonged and punishing, earning the moniker "crypto winter." By December 2018, Bitcoin had bottomed out at approximately $3,200, an 84% drawdown from its peak. The market was littered with the wreckage of Initial Coin Offering (ICO) projects that had raised billions and delivered little, shattering retail confidence.

Yet, while public interest waned and prices languished, a different kind of progress was taking place beneath the surface. Serious financial institutions, which had watched the 2017 mania from the sidelines, began quietly building the infrastructure necessary to handle digital assets. In mid-2018, Fidelity Investments announced the launch of Fidelity Digital Assets, a dedicated arm providing custody and trade execution for institutional investors. This was a statement of intent from one of the world's largest asset managers.

Simultaneously, Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, announced Bakkt. This new venture aimed to build a regulated, physically-settled Bitcoin futures market. While its launch was delayed several times, the involvement of a player like ICE signaled that Wall Street was preparing for a future where Bitcoin was a standard asset class. These developments, though not immediately impacting price, were laying the critical groundwork for the institutional inflows that would define the next cycle.

COVID, MicroStrategy, and the Corporate Treasury Thesis (2020)

The year 2020 began with cautious optimism, but the COVID-19 pandemic in March triggered a liquidity crisis across all global markets. Bitcoin was not spared, crashing over 50% in a single day on March 12, to below $4,000. For a moment, the "digital gold" narrative was severely tested. However, the response from central banks and governments worldwide—unprecedented levels of monetary and fiscal stimulus—had a profound effect on the perception of hard assets.

As trillions of new dollars entered the financial system, concerns over long-term currency debasement and inflation accelerated. It was in this environment that Michael Saylor, the CEO of business intelligence firm MicroStrategy, made a historic decision. In August 2020, the company announced it had acquired 21,454 BTC for $250 million, adopting Bitcoin as its primary treasury reserve asset.

"I had a billion dollars in cash... and it was melting like an ice cube. I realized that it was my job as the CEO of a publicly-traded company to try to preserve the shareholder value, and the US dollar was no longer an effective way to do that. I scoured the Earth for a solution... and I came to the conclusion that Bitcoin is the solution: digital gold."

Saylor didn't just buy Bitcoin; he articulated a complete philosophy, the "Corporate Treasury Thesis." He argued that holding large cash reserves on a balance sheet was a failing strategy in an inflationary world. Bitcoin, with its fixed supply and decentralized nature, represented a superior long-term store of value. MicroStrategy continued to buy aggressively, using debt financing to acquire more BTC. This move provided a playbook for other corporations, and soon, companies like Jack Dorsey's Square (now Block) and a host of others began allocating a portion of their treasuries to Bitcoin.

The 2021 Mania: Tesla, El Salvador, and First ATH

MicroStrategy's institutional endorsement primed the market for a spectacular bull run in 2021. The fire was lit on February 8, 2021, when Tesla, Inc. revealed in an SEC filing that it had purchased $1.5 billion worth of Bitcoin. The news, coming from one of the world's most visible and valuable companies led by Elon Musk, sent shockwaves through financial markets. Bitcoin's price surged over 15% almost instantly. For a time, Tesla also accepted Bitcoin as payment for its vehicles, further legitimizing its use.

This corporate validation, combined with continued low-interest rates, fueled a speculative fever. Retail investors returned in droves, many trading on accessible platforms like Coinbase, which held its own blockbuster IPO in April 2021. The bull market expanded beyond Bitcoin, with the rise of Non-Fungible Tokens (NFTs) and explosive growth in alternative blockchain protocols.

A completely new form of validation arrived on September 7, 2021. The nation of El Salvador, under President Nayib Bukele, officially adopted Bitcoin as legal tender alongside the US dollar. It was the first time a sovereign nation had ever given Bitcoin this status. The government launched a wallet called "Chivo," airdropped $30 in BTC to citizens to encourage adoption, and began accumulating Bitcoin for its national treasury.

"This will be a space for freedom, inclusion, and innovation. A place where some of the best engineers, entrepreneurs, and thinkers can build the future. This is not a project for a few, but a project for the world."

The El Salvador experiment was met with a mix of excitement from the crypto community and stern warnings from the IMF and other global financial bodies. Regardless of its long-term success, it was a landmark event, proving that Bitcoin could operate at the level of a nation-state's monetary policy. The cumulative effect of these events propelled Bitcoin to its then all-time high of $69,044 on November 10, 2021, spurred by the launch of the first US-based Bitcoin futures ETF (ProShares' BITO).

The 2022 Crash: Luna, Celsius, FTX

Just as in 2018, the hubris of the bull market set the stage for a devastating crash. The unwind of 2022 was not caused by a flaw in Bitcoin's protocol but by the catastrophic failure of centralized companies and projects built around it. The contagion began in May 2022 with the collapse of the Terra ecosystem. Its algorithmic stablecoin, UST, lost its $1.00 peg, triggering a hyperinflationary "death spiral" in its sister token, LUNA, and wiping out over $40 billion in investor capital in a matter of days.

The Luna failure exposed massive, hidden leverage throughout the industry. The first major domino to fall was crypto hedge fund Three Arrows Capital (3AC), which had taken on immense, unhedged exposure to Luna and other risky bets. Its insolvency created a credit crisis. On June 12, 2022, major crypto lending platform Celsius Network froze all customer withdrawals, trapping billions of dollars. Voyager Digital and other lenders soon followed, filing for bankruptcy and revealing that user funds had been recklessly rehypothecated and loaned out.

The final, and most shocking, blow came in November 2022. FTX, one of the world's largest and most trusted crypto exchanges, led by the charismatic Sam Bankman-Fried (SBF), imploded. A report revealed that the balance sheet of its sister trading firm, Alameda Research, was heavily composed of FTX's own exchange token, FTT. This triggered a bank run on FTX that the exchange could not honour. On November 11, 2022, FTX, Alameda, and over 100 related entities filed for Chapter 11 bankruptcy. It was later revealed that customer funds from FTX had been secretly funnelled to Alameda to cover its trading losses—an act of massive fraud.

"I'm sorry. That's the biggest thing. I f***ed up, and should have done better."

The FTX collapse was the industry's Lehman Brothers moment. It eviscerated trust, invited intense regulatory scrutiny, and sent Bitcoin's price tumbling to a cycle low of around $15,500. Yet again, the core Bitcoin network operated flawlessly throughout the chaos. The crisis reinforced the original cypherpunk ethos: "not your keys, not your coins." The failure was one of centralized custodians and human greed, not decentralized technology. The complexity of tracking gains and losses through these events underlined the need for robust tax tools like Koinly for any active trader.

ETF Approval and the Wall Street Era (2024–2026)

The recovery from the depths of the 2022 crash was surprisingly swift, driven by a single, powerful narrative: the impending approval of a spot Bitcoin ETF in the United States. For nearly a decade, asset managers had tried and failed to get such a product past the SEC. The dynamic shifted dramatically in June 2023 when BlackRock, the world's largest asset manager with over $9 trillion in AUM, filed its application for the iShares Bitcoin Trust (IBIT).

BlackRock's entry signaled that the campaign for a spot ETF was now being led by the most powerful forces in traditional finance. Their near-perfect record of getting ETFs approved instilled massive confidence in the market. Larry Fink, BlackRock's CEO and a former crypto skeptic, began publicly championing Bitcoin as a "flight to quality" and an international asset.

After months of anticipation and legal battles, the SEC officially approved 11 spot Bitcoin ETFs on January 10, 2024. The approved products included offerings from BlackRock, Fidelity, Ark Invest, Bitwise, and others. Trading began the next day, and the demand was immediate and overwhelming. Billions of dollars flowed into these new instruments, driving Bitcoin's price higher.

Remarkably, this demand pushed Bitcoin to a new all-time high above $73,000 in March 2024. This was the first time in Bitcoin's history that a new peak was reached *before* the quadrennial Learn More: Bitcoin Halving. The fourth halving occurred as expected in April 2024 at block 840,000, cutting the new supply of Bitcoin from 6.25 to 3.125 BTC per block. The combination of institutional demand from ETFs and this programmed reduction in new supply has created a strong tailwind for the asset. This new era requires careful consideration of both global exchanges and local options covered in our guide to the Learn More: Best Crypto Exchanges in Australia.

What Comes Next

The period from 2024 to 2026 is poised to be defined by the full-scale financialization of Bitcoin. The spot ETFs were just the first step. The next wave of adoption is expected to come from larger, more conservative pools of capital. Wealth management platforms are beginning to integrate the ETFs onto their systems, making them available to thousands of financial advisors. Pension funds and sovereign wealth funds, which have multi-decade investment horizons, are now conducting due diligence.

The macroeconomic backdrop remains a powerful factor. With persistent inflation and governments worldwide carrying historic debt loads, the case for a decentralized, non-sovereign, scarce asset is stronger than ever. Bitcoin is no longer just a theoretical hedge but a liquid and accessible instrument for portfolio diversification. Observers can track the health of this new cycle through key on-chain metrics on our Live Data: Bitcoin Cycle page.

Regulation remains a key variable. While the ETF approval was a major win in the US, jurisdictions like Australia are still developing their regulatory frameworks. Clear rules around custody, taxation, and market conduct will be critical for fostering continued growth and trust. For more details on the local situation, review our guide on Learn More: Crypto Regulation in Australia.

This institutional era has fundamentally altered Bitcoin's market structure. While its core principles of decentralization and fixed supply remain unchanged, its ownership base and market dynamics are now intertwined with global finance. Bitcoin has passed through its adolescence and is now taking its place on the world's financial stage.

Series Navigation

• Learn More: History of Bitcoin Part 1: Conception to Mainstream Awareness (2008–2016)
• Learn More: History of Bitcoin Part 2: The Fork Wars and ICO Boom (2017)