A new study from River Intelligence suggests that Bitcoin is still in its infancy, comparable to the Internet in 1990 or social media in 2005. The report, titled “What’s Driving Bitcoin Adoption in 2025?”, explores the current state of Bitcoin adoption, its value proposition, custody landscape, and decentralization trends.
Bitcoin Adoption Still in Early Stages
According to the study, despite growing institutional interest and increasing government involvement, Bitcoin adoption remains at just 3% of its full potential. River Intelligence compares this stage to the early days of the Internet, emphasizing that major expansion lies ahead.
Currently, only 4% of the global population owns Bitcoin, and institutions have largely sidelined it in their portfolios. The total addressable market remains under 1% of its estimated capacity. However, with governments and corporations progressively engaging in the Bitcoin ecosystem, the landscape is shifting.
By 2024, 18 countries held Bitcoin through various means, including government-backed mining, purchases, donations, and seizures. While countries like China and Venezuela maintain restrictive policies, others, including Russia and Bolivia, have legalized Bitcoin mining, while Argentina and Turkey have approved Bitcoin payments.
Scarcity and Value Proposition
Bitcoin’s scarcity remains a crucial driver of its value. In 2024, Bitcoin’s supply growth lagged behind all major fiat currencies and gold. Bitcoin is increasingly viewed as a store of value rather than a medium of exchange, with an average transaction value of $17.8K in 2024. The total annual value transferred via Bitcoin exceeded $3.43 trillion, surpassing 2023 but falling short of 2021 and 2022 levels.
Market capitalization for Bitcoin exceeded $2 trillion in 2021, making it the world’s 11th largest currency by USD equivalent. Unlike previous bull markets, which were driven by liquidity expansion, the current rally is fueled by Bitcoin ETFs and corporate investment. Hedge funds and investment advisors now play a larger role in Bitcoin’s price movements.
Despite growing institutional involvement, Bitcoin remains primarily owned by individuals, who hold nearly 70% of its supply. Public companies are increasingly accumulating Bitcoin, with business-held BTC growing by 80% in 2024.
Bitcoin Custody and Lightning Network Challenges
The study finds that Bitcoin custody has matured significantly. The share of BTC held on exchanges has dropped from over 70% in 2021–2023 to just 56.6% in 2024. ETFs and DeFi platforms hold around one-third of all Bitcoin, while 10.3% is in long-term strategies.
Security measures have improved, reducing Bitcoin losses from hacks. The industry has widely adopted Proof of Reserves following the FTX collapse, making exchange failures less detrimental to users.
On the other hand, the Lightning Network has seen sluggish growth, as relatively low BTC fees and limited merchant adoption hinder its expansion. River Intelligence suggests that an increase in Bitcoin transaction fees could boost Lightning Network usage.
Decentralization and Mining Distribution
Bitcoin’s decentralization has continued to strengthen, with an increasing number of developers, nodes, and growing network hashrate. Despite this, mining remains concentrated among a few players, with the top three mining pools producing nearly 60% of the total hashrate. The U.S., Russia, and China dominate Bitcoin mining, with Russia gaining a stronger foothold in 2024.
River Intelligence’s research underscores that Bitcoin remains in its early adoption phase, presenting significant growth potential. While challenges like Lightning Network expansion and mining centralization persist, Bitcoin’s increasing institutional adoption, maturing custody solutions, and continued scarcity reinforce its long-term value proposition. As regulations evolve, Bitcoin could follow the trajectory of past technological revolutions, transitioning from niche adoption to mainstream financial infrastructure.
