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Bitcoin has the benefit of a group of different tailwinds right now.
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It’s also looking good over longer time frames.
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Keep your eye on the horizon, not the coin’s performance this month or next.
In July, investors expect fireworks from Washington to Wall Street, and this year, Bitcoin (CRYPTO: BTC) looks determined to light the sky itself. A handful of powerful forces and an often-jittery macroeconomic backdrop are suddenly all starting to push in the same direction.
The convergence could juice prices in July, yet the bigger payoff is what those forces say about Bitcoin’s next decade. Let’s dive in and explore how the near term connects to the bigger picture here.
Imagine a giant vacuum cleaner running on autopilot. That is essentially how spot Bitcoin exchange-traded funds (ETFs) work.
Whenever investors hand cash to asset issuers, the funds must buy the coins and warehouse them, with no selling. In the opening week of July, that vacuum pulled in $217 million on July 7 alone, capping a three-day haul of about $1 billion and lifting cumulative net inflows to Bitcoin ETFs above $50 billion.
Many investors missed the headlines, yet the buying keeps grinding onward because asset managers are obligated to do it to back their ETFs. Mechanical demand is meeting a constrained supply, which is a bullish recipe whenever the float available for public trading is limited or thin.
Corporate treasurers are now acting nearly as mechanically when it comes to accumulating Bitcoin.
In particular, the company Metaplanet added 2,205 coins to its holdings on July 7, lifting its stash to 15,555 and publicly targeting an allocation of 210,000 coins, or roughly 1% of all the coins that will ever exist, by 2027.
Even if this plan is incredibly ambitious and might not become a reality, it indicates that at least some buyers with deep pockets are eager to grab as much of the coin as they can manage, even if it means borrowing money to do so. And with each purchase, more coins leave circulation.
Policymakers are, surprisingly, helping this process along. A March 6 executive order mandated the creation of an as-yet unimplemented U.S. Strategic Bitcoin Reserve, instructing federal agencies to retain rather than sell any coins forfeited in the future.
Implementation rules were supposed to be drafted within 70 days of the order, so the final guidelines could land by late July. If the government follows through and becomes a net holder instead of a seller, the supply pressure facing Bitcoin tightens even further, and perhaps permanently.