Bitcoin as a strategic treasury asset: turning volatility into value

Over the past 18 months, we’ve seen a decisive shift in how digital assets,  particularly Bitcoin,  are being treated across the financial system.

The conversation has moved on. Bitcoin is now being integrated into balance sheets, portfolios, and treasury frameworks with increasing regularity. From public companies and ETFs to sovereign wealth funds and pensions, Bitcoin is emerging as a viable, functional part of institutional capital allocation. 3.3 million BTC in treasuries and counting.It's no longer about whether to engage.

It's about how to build with it. Because Bitcoin, when properly understood, isn't just a passive reserve. It’s a working asset. A structural source of return. And increasingly - a strategic advantage.


In this edition of The Wire, we explore how Bitcoin is being used not just as a store of value, but as a yield-generating component of modern treasury and investment strategy.

Bitcoin is increasingly being evaluated as part of treasury and capital allocation strategies. As institutional infrastructure matures, with robust custody, deeper liquidity, and round-the-clock access, Bitcoin is becoming operational. And with that, its role is evolving from passive reserve to strategic tool.

For treasurers, the value proposition today is clear:

1. A hedge: In an environment shaped by inflation, rate uncertainty, and fiscal imbalances, Bitcoin provides an independent store of value, outside the bounds of central bank policy.
2. A diversifier: Its behavior is distinct from equities and bonds, offering an alternative risk profile and a source of protection during market dislocations.
3. An asymmetric opportunity: Small allocations can create meaningful upside, with limited impact on downside risk,  a rare convexity in modern asset markets.

Institutional and sovereign holdings of Bitcoin continue to rise. Over 3.3 million BTC are now held across public companies, private enterprises, ETFs, custodians, and governments -  a 3.99% increase in the past 30 days. This growing allocation reflects Bitcoin’s transition from speculative asset to functional reserve within diversified capital structures. Source: BitcoinTreasuries.net, May 8, 2025

But beyond these core traits, something else is driving institutional engagement:

the depth of the market, the availability of custody, and the fact that the crypto market never closes.

Bitcoin is now recognised as an operational asset: it has moved from concept to operational asset. Which raises the more important question: What gives Bitcoin this level of strategic utility, and what makes it unlike anything else on the balance sheet?

A new kind of reserve asset

So what gives Bitcoin its strategic edge?

It starts with scarcity. Like gold, Bitcoin is finite, but unlike gold, that scarcity is absolute. Only 21 million coins will ever exist. There is no discretionary supply response. No printing. No dilution. For investors concerned with long-term purchasing power, that alone is compelling.

But Bitcoin doesn’t stop at being scarce. It trades globally, around the clock. It clears instantly.

And it's liquid, remarkably so. With average daily volumes (spot + derivatives) between $50 to $100 billion, Bitcoin trades more than Apple, Microsoft, Amazon, or Tesla,  and in some cases, more than national currencies like the Brazilian Real. It is now in the same liquidity bracket as the Swiss franc.

Average daily trading volume (USD equivalent)

Bitcoin’s daily trading volume rivals major currencies and far exceeds top equities
With ~$50–100B in average daily volume across spot and derivatives, Bitcoin now trades more than Apple, Microsoft, or Amazon,  and on par with currencies like the Swiss franc. This level of liquidity reinforces Bitcoin’s operational utility, making it viable not just as a long-term allocation, but as an active, working asset in institutional portfolios.

And then there’s portability. Bitcoin can move across borders, jurisdictions, and counterparties in seconds. With no clearing house, no banking hours, no physical constraints. You can transfer meaningful value across the globe, as easily as sending an email.

Together, these traits make Bitcoin operational in a way few assets are:

1. Scarce, like gold,  but harder.
2. Liquid, like major FX pairs,  but accessible 24/7.
3. Portable, like data, but with financial finality.

These are not abstract qualities. They are functional advantages, especially for institutions looking to manage treasury capital across multiple jurisdictions, currencies, and time zones.

But there’s one more characteristic - often misunderstood - that completes the picture. Volatility.

To some, it’s a barrier. To others, it’s the unlock. Because Bitcoin’s volatility isn’t incidental. It’s structural. And for those who know how to manage it, it’s an opportunity.

That was the core message at Strategy 2025, where our Group CIO Javier Rodriguez-Alarcon joined Michael Saylor on stage to discuss how institutions are rethinking Bitcoin - not as a speculative asset, but as a working one.

Volatility as a strategic lever

Let’s be clear: Bitcoin is volatile. And no, we’re not pretending otherwise.
The asset moves more than traditional markets,  materially so. But the mistake is equating that volatility with unmanageable risk. In reality, Bitcoin’s volatility is one of the reasons it’s so interesting to work with.

A comparative analysis of daily return distributions between Bitcoin and the S&P 500 highlights key differences in their risk and reward profiles.

Bitcoin exhibits a much wider spread, both on the downside and the upside. While the S&P 500’s worst 5% of days typically see losses of around –1.7%, Bitcoin’s 5% tail extends to –5.6%. But that same distribution gives you access to upside: Bitcoin’s best 5% of days hit +6.2%, compared to just +1.6% for the S&P. In quantitative jargon, this actually means that the distribution is skewed to the positive side.

More importantly, this isn’t rare. Roughly 27% of all BTC trading days exceed the S&P’s 95th percentile performance.

Bitcoin’s return profile reveals consistent tail exposure,  in both directions. While traditional assets like the S&P 500 experience rare tail events, Bitcoin operates in a regime where extreme daily moves are routine. With 3.7% daily volatility and 27% of days exceeding the S&P’s 95th percentile, Bitcoin offers both greater risk,  and greater opportunity, for those equipped to manage it. This asymmetry underpins its appeal as a source of tactical return, not just directional exposure. Source: GoogleFinance. Period of analysis: 6-May-2016 to 31-Mar-2025.

And here’s the key insight: volatility is not risk. Volatility is movement.

Risk is the potential for permanent capital destruction. Volatility is the price you pay for liquidity, optionality, and the ability to act. And in Bitcoin’s case, that movement is consistent, directional, and - when managed correctly - monetizable.

The point isn’t to eliminate volatility. It’s to understand it. To price it. And to use it. Because this embedded movement is precisely what allows Bitcoin to shift from a passive exposure to an actively managed, income-generating asset.

And that’s where we go next.

Turning exposure into strategy with active management

Volatility, when understood, becomes a resource. But to unlock its value, exposure can’t be passive. Owning Bitcoin is only the starting point. What matters is how that exposure is structured , and how it’s managed.

In today’s institutional context, managing Bitcoin effectively means considering four key dimensions:

1. Entry: How you gain exposure matters. Are you allocating via spot markets? Gradually through dollar-cost averaging? Or deploying structured products or options? The method defines the flexibility and risk characteristics from the outset.
2. Custody: Digital assets require secure, segregated, and regulated custody. This is not only about protection,  it’s about operational confidence, compliance, and internal governance.
3. Risk management: Bitcoin’s volatility isn’t a fixed number,  it’s a dynamic condition. Understanding price exposure, time horizon, and downside scenarios is what separates risk-taking from risk-aware strategy.
4. Active management: This is where institutions can shift from passive allocation to performance generation. When paired with intelligent tools, Bitcoin’s embedded volatility can be harvested for yield, improved entry points, and ultimately coin accumulation.

Over time, increased institutional participation has played a measurable role in stabilizing Bitcoin’s volatility. The ratio of retail to institutional holdings has shifted dramatically since 2016, with institutions steadily gaining share. This structural maturation of the holder base coincides with a long-term decline in realized volatility. In early phases, retail-driven growth brought sharp price swings. Today, deeper liquidity, longer-term capital, and institutional frameworks are creating more consistent market behavior. For allocators, this isn’t just a sign of adoption. It’s a signal that Bitcoin is becoming more predictable, more professional, and more usable inside portfolios.

Institutional adoption is driving down volatility - As the ratio of institutional to retail Bitcoin holders increases, realized volatility has steadily declined. The shift toward professionally managed capital, visible since 2018, reflects market maturation — with deeper liquidity, longer holding periods, and more consistent behavior. This trend reinforces Bitcoin’s viability as a stable, strategic asset for portfolios. Source: FRED, MacroMicro [Retail Investor = BTC holding <10, Institutional Investor = BTC holding > 1000)  and GlassNode. Right Axis shown in Log Scale

Managing Bitcoin well means managing it like any other strategic position and that leads us to the practical question. How do you turn this volatility into a revenue stream, without introducing unmanaged risk?

Bitcoin’s volatility remains structurally elevated, offering consistent premium opportunities Compared to equity markets (VIX), Bitcoin’s volatility has remained persistently high over multiple years, rarely dipping below 50. This structural characteristic is what enables repeatable yield strategies like options selling, transforming volatility from a risk factor into a revenue stream. Source: GoogleFinance and Deribit. For BTC volatility level we use DVOL.

For institutions, the BTC structural volatility is more than a statistical feature. It's a persistent source of premium. And that premium can be systematically harvested.

In traditional markets, volatility spikes are episodic. They’re brief and hard to time. But in crypto, elevated volatility is embedded in the asset class,  and that means it can be harvested systematically.

This is where active strategies come in, particularly selling cash-secured puts. Done correctly, this approach allows you to:

1. Accumulate more coins. Generate additional BTC through cash-secured put selling, a disciplined way to gain exposure at predefined entry points during market pullbacks.
2. Generate yield. Premiums collected from selling options serve as a yield mechanism on held BTC, effectively putting idle assets to work while maintaining directional exposure.
3. Diversify yield sources. Transition from credit-based income strategies to market-driven volatility harvesting,  broadening the types of risk institutions are compensated for.

In essence, volatility becomes the raw material for coin accumulation, yield generation, and portfolio flexibility. Bitcoin doesn’t just move. It pays, when you know how to engage with it.

From volatility to value

If we compare two approaches to Bitcoin exposure,  passive holding versus active management,  the difference is not just incremental. It’s transformative.

Passive holders simply retain their coins, fully exposed to market direction. They benefit when BTC appreciates and endure the drawdowns when it doesn't. There’s no yield, no efficiency, only beta.

Active BTC accumulation compounds into superior USD returns. A disciplined, option-based strategy generates over 7% annual BTC growth with low drawdowns. When paired with Bitcoin appreciation, this translates into a 12 percentage point boost in annualized USD returns,  from 59.2% to 70.9% , without materially increasing volatility. Active exposure doesn’t just outperform; it improves the return-to-risk profile. Note: Period of analysis: 31-Dec-2019 to 31-Mar-2025. Source: Company Data for Active and CoinGlass for BTC. Performance metrics based on monthly returns.

In contrast, active strategies are designed to work with the asset’s volatility. Through disciplined put selling, careful entry timing, and structured reallocation, exposure is grown tactically. Coin accumulation becomes part of the strategy, not just a side effect of buying the dip.

In practice, this results in steady, organic BTC growth, over 7% annually, without deploying new capital. And it’s done through risk-aware positioning, not aggressive leverage or speculative chasing. These are conservative frameworks, built to monetise volatility when the profile is favourable, and to step back when it’s not.

That accumulation matters. Because as BTC appreciates, those additional coins compound. What begins as a modest edge in BTC holdings becomes a material advantage in USD performance. Annual returns climb from 59% to over 70%, while volatility remains almost unchanged.

This isn’t about predicting where Bitcoin will go. It’s about making sure you’re structurally positioned to benefit,  wherever it goes.

Volatility it’s a multi-dimensional problem

Active management doesn’t just reduce idle exposure.It redefines what Bitcoin can do inside a portfolio.

Capturing value from volatility isn’t just about selling puts. It’s about navigating a multi-dimensional, constantly shifting landscape,  one that requires precision and preparation.

Every decision matters:

1. What level of volatility are you selling into?
2. Which strike or delta offers the best trade-off between risk and premium?
3. What expiry aligns with your treasury objectives and liquidity windows?
4. Where is sentiment moving?
5. What does the volatility surface look like, right now?

Volatility varies significantly across strikes and deltas - and that’s where the edge is Both implied volatility vs. strike and vs. delta show clear asymmetries in market pricing. These variations create pockets of premium that can be systematically harvested. Understanding where volatility is overpriced,  and structuring trades accordingly,  is critical to converting movement into yield, rather than unmanaged risk. Source: Volatility surface from Deribit as of 2025-Apr-24. For the volatility surface we linearly interpolate between available values to generate the grid and smoothen the surface.

They’re the tactical levers that determine whether you're extracting yield or leaving it on the table. This is where true expertise lies - in understanding the shape of the volatility surface, monitoring sentiment shifts, assessing liquidity depth, and executing with institutional-grade discipline.

Because without the right infrastructure, models, and insight, you’re not taking smart risk, you’re flying blind.

And when it’s done right,  it turns volatility into one of the most dependable sources of return in the digital asset space.

Reframing the conversation

In the evolution of Bitcoin’s role within institutional portfolios, we’re witnessing a shift from pure directional conviction to structural integration.Bitcoin is no longer treated as a thematic trade or macro hedge. It’s being built into the operating rhythm of treasury and capital markets strategies, and not because it’s volatile, but because that volatility is persistent, liquid, and tradable.

In a market where traditional sources of yield are constrained, and correlations across asset classes continue to rise, Bitcoin offers something rare: an uncorrelated, volatility-rich asset with institutional infrastructure and tactical flexibility.

But unlocking that advantage doesn’t come from exposure alone. It comes from understanding:

1. Understanding where volatility becomes premium.
2. Where passive becomes productive.
3. Where structure outperforms sentiment.

Bitcoin isn’t just an asset with upside. It’s a toolkit, and institutions are only beginning to learn how to use it.