Bitcoin's Market Identity Shift: From "Crypto" to "Money" and the Institutional Revolution

In October 2025, Jack Dorsey, co-founder of Block Inc. and former CEO of X (formerly Twitter), reignited a critical debate in the cryptocurrency space by declaring that Bitcoin is "money, not crypto." This assertion, rooted in the Bitcoin white paper's description of a "peer-to-peer version of electronic cash," was posted by Jack Dorsey in Dorsey's tweet and has sparked a reevaluation of Bitcoin's market identity. Dorsey's remarks, coupled with regulatory clarity and macroeconomic tailwinds, are accelerating institutional adoption and reshaping Bitcoin's trajectory as a global financial asset.

The "Money vs. Crypto" Narrative: A Strategic Rebrand

Dorsey's argument hinges on distinguishing Bitcoin from the broader "crypto" category, which often includes speculative altcoins and utility tokens. By emphasizing Bitcoin's role as a decentralized, censorship-resistant monetary network, he aligns with the original vision of the Bitcoin white paper. This framing is not merely semantic-it signals a strategic rebranding of Bitcoin as a legitimate store of value and medium of exchange, rather than a speculative asset.

The impact of this narrative shift is evident in market behavior. Following Dorsey's October 2025 posts, Bitcoin's price rebounded 2.82% within 24 hours, surging to $110,222, in what was reported as Bitcoin's price rebound. This price action coincided with renewed investor optimism, particularly among institutions. Dorsey's advocacy for Bitcoin as a practical payment system-evidenced by Block Inc.'s zero-fee tools for small businesses-further reinforces the idea that Bitcoin's long-term survival depends on real-world utility.

Regulatory Clarity: The Catalyst for Institutional Adoption

Regulatory developments in 2025 have been pivotal in legitimizing Bitcoin as an institutional asset. The U.S. SEC's shift under Chair Paul Atkins-from enforcement-driven policies to proactive guidance-has created a framework where Bitcoin ETFs can thrive. The approval of spot Bitcoin ETFs, including BlackRock's iShares Bitcoin Trust (IBIT), has unlocked over $50 billion in institutional capital, according to Datos Insights. These ETFs now account for 75% of Bitcoin's trading volume, signaling a structural shift in market dynamics, according to FinancialContent.

Key regulatory milestones, such as the rescinding of SAB 121 and the implementation of the GENIUS Act, have removed barriers for banks to custody Bitcoin on their balance sheets, marking important regulatory milestones. This has enabled corporate treasuries and sovereign wealth funds (SWFs) to allocate Bitcoin as a hedge against inflation and currency devaluation. By mid-2025, 59% of institutional portfolios included Bitcoin, with 10% or more allocated to the asset, according to Pinnacle Digest.

Macroeconomic Tailwinds: Inflation, Debasement, and the Case for Bitcoin

Bitcoin's appeal as a hedge against macroeconomic instability has intensified in 2025. With global inflation rates persisting above 4% and central banks expanding money supplies, Bitcoin's capped supply of 21 million coins has made it an attractive alternative to fiat currencies. Institutional investors, including MicroStrategy and SWFs, have embraced Bitcoin as a strategic reserve asset, collectively holding over 3.67 million BTC-17% of the total supply, per OKX.

The Federal Reserve's dovish policy signals, including anticipated rate cuts, have further fueled demand for risk-on assets. Bitcoin's correlation with traditional equities, particularly the Nasdaq 100, has risen to 0.87, according to an arXiv paper. Analysts project Bitcoin could reach $200,000 by late 2026, driven by sustained institutional demand and the approaching halving event, per Blockchain Magazine.

Investor Behavior: Institutional Accumulation vs. Retail Caution

Post-Dorsey's remarks, investor behavior has diverged sharply between institutional and retail segments. Institutions have aggressively accumulated Bitcoin, with global ETPs and corporations purchasing 944,330 BTC in October 2025 alone-surpassing 2024's total, according to Bitcoin Magazine. ETF inflows, particularly into IBIT, have surged, with $1.3 billion in net inflows recorded in July 2025, according to Albion Crypto. This institutional buying has stabilized Bitcoin's volatility, reducing its 30-day rolling volatility by 75% since early 2024, according to Cointelegraph.

Retail investors, however, have adopted a more cautious stance. Despite Bitcoin's price rebound, retail trading volume has declined, with platforms like Binance and Bybit seeing a predominance of short positions, as reported by The Financial Analyst. This divergence highlights a well-documented investment cycle: institutions accumulate during uncertainty, while retail investors often re-enter when sentiment turns bullish.

The Decentralization Dilemma: Can Bitcoin Stay "Permissionless"?

Dorsey has raised concerns about Bitcoin's risk of institutional capture, warning that its decentralized ethos could erode if it becomes a purely speculative asset or institutional reserve, as noted in Bitcoinist. While he supports Layer 2 innovations like the Lightning Network, he emphasizes the need for continued experimentation to preserve Bitcoin's adaptability for everyday transactions, according to Bitcoin Protocol. This tension between institutional adoption and decentralization remains a critical debate, particularly as corporate treasuries and SWFs increase their holdings.

Conclusion: A New Era for Bitcoin

Jack Dorsey's "money, not crypto" narrative, combined with regulatory clarity and macroeconomic tailwinds, is accelerating Bitcoin's transition from a niche asset to a mainstream financial instrument. Institutional adoption, driven by ETFs and corporate treasuries, has stabilized Bitcoin's price and expanded its utility. However, the challenge lies in balancing institutional demand with Bitcoin's foundational principles of decentralization and censorship resistance.

As the market approaches the 2026 halving and potential rate cuts, Bitcoin's role as a hedge against inflation and a global monetary network will be tested. For now, the data suggests that Bitcoin's evolving identity-as both a store of value and a medium of exchange-is firmly on track to redefine its place in the financial system.