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Bitcoin punched by a recent file above $122,000 on the morning of 14 July, extending its month-long rally to greater than 16 p.c. Towards that backdrop, Charles Edwards—the founder and chief govt of digital-asset hedge fund Capriole Investments—argues that the market is just “within the early phases” of a wider liquidity-driven increase that might dominate the remainder of 2025 and past.
The Bitcoin Liquidity Supercycle
Within the newest Capriole publication, Edwards contends that “cash and liquidity supplied the backdrop for capital flows, and Bitcoin Treasury Firms are the funnel.” He dismisses the concept that the previous fortnight’s $20,000 advance was a technical accident, pointing as a substitute to deep macro currents which were constructing for months.
“The most important Bitcoin rallies happen when the market is internet quick the USD,” he writes, pointing to Capriole’s proprietary “USD Positioning” gauge, which aggregates futures information throughout main currencies. The metric has been “deeply destructive” since early summer time, signalling that international buyers are decisively betting towards the greenback and in favour of arduous property.
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One other pillar is credit score. BBB-rated corporate-bond spreads have been grinding tighter for the reason that spring, a traditional risk-on sign in conventional markets that, since 2020, has mapped nearly tick-for-tick onto main Bitcoin up-moves. “Extra proof,” Edwards notes, “that Bitcoin is a tradfi asset.”
Maybe the strongest tail-wind, nonetheless, is uncooked cash development. International M3 has been increasing at an annualised 9 p.c clip—an traditionally excessive fee that Capriole says final coincided with common 12-month Bitcoin returns of roughly 460 p.c. Edwards cautions that, as a multi-trillion-dollar asset right now, Bitcoin is unlikely to repeat that magnitude, “however it wouldn’t be stunning to see one thing very substantial from right here.”
Capriole’s framework additionally attracts on an historic lead-lag relationship between gold and Bitcoin. When bullion enters a significant breakout, Bitcoin has tended to observe three to 4 months later. Gold’s early-2025 surge—and its outperformance versus international equities—subsequently provided “robust help for the present market’s diminishing demand for fiat cash and favour of arduous cash,” Edwards argues. Since Capriole flagged gold’s transfer in April, Bitcoin has risen 28 p.c.
Equities, too, are providing inexperienced lights. The New York Inventory Alternate advance–decline line broke to new highs final week, whereas Capriole’s “Fairness Premium” indicator reset to zero in late Might—each traditionally according to multi-month stretches of increasing danger urge for food.
All of these information factors feed into the agency’s flagship Bitcoin Macro Index, a composite of dozens of public and proprietary variables that Capriole makes use of to form buying and selling exposures in its fund. The index “remains to be in robust constructive development territory,” Edwards studies, even after the coin’s newest vertical transfer. That means the underlying drivers—liquidity, danger sentiment and on-chain exercise—“stay intact.”
The Bitcoin Treasury-Firm Flywheel
But maybe essentially the most putting piece of the puzzle lies exterior pure macro. Edwards highlights the emergence of Bitcoin Treasury Firms (TCs)—company autos that increase fiat capital in fairness or debt markets after which deploy it into spot BTC—as the brand new “main bubble dynamic of this cycle.”
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Quarterly inflows into TCs reached $15 billion in Q2, and Capriole counts no less than 145 such corporations now pursuing the technique. With their market capitalisations inflated by paper beneficial properties on balance-sheet cash, they will faucet ever-larger funding rounds—a reflexive loop that Edwards believes “will seemingly assist add over $1 trillion to Bitcoin’s market cap over the subsequent 12 months.”
He rejects the notion that this quantities to unhealthy centralisation: “If Bitcoin is to someday change into base cash, it must scale to tens of trillions to flatten volatility. The one means that occurs is mass acquisition like we’re seeing right now.”
Edwards stresses that his evaluation sits on a months-long horizon. “When Bitcoin sees big rallies there are all the time robust pullbacks and native overheating,” he concedes, including that the publication intentionally sidelines short-term on-chain froth to concentrate on the “larger image and driving components for the subsequent six months.”
Nonetheless, with central-bank liquidity ample, the greenback crowded quick, credit score stress muted and a structurally new pool of company consumers stepping in, Capriole’s conclusion is unambiguous: the liquidity faucet is large open, and the Bitcoin supercycle it feeds has solely simply begun.
“Whereas right now’s early adopters could also be seen as speculators, will probably be very apparent in hindsight. After the Treasury firm wave is the Authorities treasury wave (subsequent cycle). We’re merely using the adoption curve which requires trillions of {dollars} to movement in to Bitcoin from the entities which have it with a purpose to obtain scale,” Edwards concludes.
At press time, BTC traded at $122,438.
Featured picture created with DALL.E, chart from TradingView.com