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Bitcoin punched via a contemporary document 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 barely “within the early levels” of a wider liquidity-driven increase that would dominate the remainder of 2025 and past.
The Bitcoin Liquidity Supercycle
Within the newest Capriole newsletter, Edwards contends that “cash and liquidity offered the backdrop for capital flows, and Bitcoin Treasury Corporations are the funnel.” He dismisses the concept the previous fortnight’s $20,000 advance was a technical accident, pointing as an alternative to deep macro currents which were constructing for months.
“The largest Bitcoin rallies happen when the market is web 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 unfavorable” since early summer time, signalling that international traders are decisively betting in opposition to the greenback and in favour of exhausting property.
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One other pillar is credit score. BBB-rated corporate-bond spreads have been grinding tighter because the 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 progress. World M3 has been increasing at an annualised 9 p.c clip—an traditionally excessive price 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 at present, 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 supplied “robust assist for the present market’s diminishing demand for fiat cash and favour of exhausting 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 Change advance–decline line broke to new highs final week, whereas Capriole’s “Fairness Premium” indicator reset to zero in late Might—each traditionally in keeping with multi-month stretches of increasing threat 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 “continues to be in robust constructive progress territory,” Edwards studies, even after the coin’s newest vertical transfer. That means the underlying drivers—liquidity, threat sentiment and on-chain exercise—“stay intact.”
The Bitcoin Treasury-Firm Flywheel
But maybe essentially the most putting piece of the puzzle lies outdoors pure macro. Edwards highlights the emergence of Bitcoin Treasury Companies (TCs)—company automobiles 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 companies now pursuing the technique. With their market capitalisations inflated by paper positive factors on balance-sheet cash, they’ll faucet ever-larger funding rounds—a reflexive loop that Edwards believes “will possible assist add over $1 trillion to Bitcoin’s market cap over the following 12 months.”
He rejects the notion that this quantities to unhealthy centralisation: “If Bitcoin is to someday turn into base cash, it must scale to tens of trillions to flatten volatility. The one manner that occurs is mass acquisition like we’re seeing at present.”
Edwards stresses that his evaluation sits on a months-long horizon. “When Bitcoin sees big rallies there are at all times robust pullbacks and native overheating,” he concedes, including that the e-newsletter intentionally sidelines short-term on-chain froth to concentrate on the “larger image and driving elements for the following six months.”
Nonetheless, with central-bank liquidity ample, the greenback crowded quick, credit score stress muted and a structurally new pool of company patrons stepping in, Capriole’s conclusion is unambiguous: the liquidity faucet is extensive open, and the Bitcoin supercycle it feeds has solely simply begun.
“Whereas at present’s early adopters could also be seen as speculators, it will likely 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 move in to Bitcoin from the entities which have it with the intention to obtain scale,” Edwards concludes.
At press time, BTC traded at $122,438.
Featured picture created with DALL.E, chart from TradingView.com
