Bitcoin becomes the 'NASDAQ' of the digital asset market

The Herald Business launches Crypto Insight, a column offering expert perspectives on digital asset policy, technology and markets. It provides in-depth analysis of market conditions, global developments and the mainstreaming of digital assets. Crypto Insight aims to be a compass for understanding complex market structures and gauging the future value of digital assets.

Bitcoin is cementing its role as the benchmark for the digital asset market — the first reference point investors turn to when gauging the state of the space, much as the NASDAQ index does for US equities.

Several developments illustrate the shift. Even as Bitcoin's price fell sharply from its peak, it retained more than half of the total virtual asset market capitalization, holding its position as the dominant asset by a wide margin. The correction was not confined to Bitcoin alone — altcoins and the broader market declined in tandem.

According to Kaiko Research, major altcoins also posted steep losses this year, moving in close correlation with Bitcoin. Each cryptocurrency is increasingly driven not just by its own fundamentals but by shifts in the market's overall risk appetite, pulling assets in the same direction. That synchronization does not by itself make Bitcoin an "index," but it confirms its role as a benchmark asset that reflects the risk and direction of the entire market.

Behind this shift lies the integration of Bitcoin into mainstream finance. The launch of spot Bitcoin ETFs in the United States has allowed investors to gain exposure through conventional brokerage accounts and wealth-management platforms, much as they would with shares or bonds. According to Ark Invest, Bitcoin held by US spot ETFs and publicly listed companies stood at roughly 12 percent of total circulating supply as of end-2025, up from 8.7 percent a year earlier — a gain of about 3.3 percentage points. ETFs and corporate treasuries have added an entirely new layer of demand to what was once a retail-dominated market.

The flow of capital is also changing. In the earlier retail-driven market, money rotating out of Bitcoin typically moved into Ethereum and smaller altcoins. Capital entering through ETFs and other traditional financial products, however, follows a different path. Funds leaving a Bitcoin ETF may flow into equities, bonds or cash rather than into altcoins.

Equally notable is the pattern of ETF demand recovering repeatedly after sharp price drops. During this year's market correction, US spot Bitcoin ETFs suffered significant outflows — but early this month, roughly $860 million flowed back in net within a single week. ETFs draw a broad investor base spanning institutions, retail participants, hedge funds and wealth managers. The fact that demand for Bitcoin through the traditional financial system reasserts itself even after steep price declines is significant.

South Korea's market, by contrast, remains overwhelmingly retail. According to financial regulators, only 19.5 percent of eligible users on the country's five major virtual asset exchanges actually traded in the most recent month as of end-June, and domestic investors' virtual asset holdings fell from roughly 125 trillion won ($88.6 billion) in early last year to about 57 trillion won.

In short, the US market is layering new demand — through ETFs, listed companies and asset managers — on top of its existing retail base, while South Korea remains a structure in which individual investors still drive market liquidity. The same Bitcoin market looks structurally different depending on whether it is connected to the traditional financial system.

Bitcoin has now established itself as the benchmark for direction and risk across the digital asset market. The force driving that transformation comes not from short-term market sentiment but from Bitcoin's deepening integration with the traditional financial system through ETFs, listed companies and asset managers.

The next chapter for Bitcoin will be determined less by how high its price climbs than by how firmly it takes hold as a benchmark asset within global financial markets.

kyoung@heraldcorp.com