Bitcoin And Treasury Companies

Bitcoin Mid-Cycle

The 30-day trade range for Bitcoin is exceptionally narrow, at around 8%. It’s a dull market that’s quiet, but on balance, it’s trending upward.

BTC is trading almost 60% above the prior cycle’s all-time high, and yet there is no clear sign that an ‘altseason’ is on the horizon.

Note, however, that the options market is pricing in an increasingly large amount of downside risk for the rest of this month.

New demand for BTC is still being driven by the spot Bitcoin ETFs. Year-to-date, they likely account for 25% of the demand.

Inflows into spot Bitcoin ETFs continue to grow. In the last 6 days alone, the ETFs have recorded inflows of $1.8 billion.

Spot Bitcoin ETF assets under management (AUM) sit at $135 billion. That compares favourably with the gold assets under management of $270 billion. That is significant progress in the 17 months since the launch of the ETFs.

The success of the ETFs may explain why the drawdowns in BTC are shallower, at around -25% to -30%, and, additionally, why BTC is taking multiple weeks to consolidate before regaining momentum to the upside.

Treasury Companies

Treasury companies have proliferated since the start of the year.

In November 2024, the Bitcoin treasury company balance was 300,000 coins. The balance now exceeds 720,000 coins.

In the last six months, Bitcoin treasury companies have consistently accumulated around 35,000 coins a month.

Strategy is currently the dominant treasury company, accounting for 80% of the balance.

While the introduction of Bitcoin treasury companies represents a structural bid for Bitcoin, the potential for future leverage issues can’t be overlooked. Speculation on these treasury companies will likely be high.

Stablecoins

The Senate Stablecoin Bill (Genius Act) passed the Senate this week and now awaits consideration by the House.

There appears to be considerable bipartisan support for the Bill, with the understanding that it’s a key element in keeping the U.S. at the centre of an increasingly competitive global market.

Passing the Bill will enable a framework for stablecoin inclusion in the financial market infrastructure and be positive for both the U.S. Dollar and Treasuries.

Stablecoins will help facilitate a future where all financial instruments are held in a single, cryptographically protected wallet, with blockchain as the underlying technology.

This has significant implications for current financial institutions, and they are likely scrambling to secure their role and establish a foothold in the stablecoin space.