It Is Happening

In the midst of tracking markets, fund performance, operations, etc, it’s easy to miss the bigger picture: It’s Happening! The monetary regime change is unfolding before our eyes. In this piece, I’ll outline a few key points from the past month while keeping US election commentary to a minimum. I hope you can stay grounded as the US media machine ramps up to peak fear, uncertainty, and doubt mode. Through all this volatility, Bitcoin is what keeps me sane. Eventually, non-state monetary tech will limit politicians’ power to inflate, regulate, and manipulate—and that future can’t come soon enough.

Bitcoin Reaches New Heights

Bitcoin has returned to its all-time highs, rewarding holders across nearly all entry points.

 
 

Inflation’s Persistent Impact on Purchasing Power

When adjusted for inflation, Bitcoin is still below its previous peaks, highlighting the damaging effects of inflation on purchasing power. This reality underscores the importance of investing in a scarce, non-state asset that politicians cannot inflate.

Bitcoin Showing Up US Bonds

Even though Bitcoin remains below its inflation-adjusted highs, it has surpassed previous highs when valued against U.S. bonds.

 

Bitcoin/TLT (long US bonds index) Ratio

 

Who Really Wants US Bonds?

Traditionally, foreign central banks, such as those of Japan and China, were major purchasers of U.S. Treasuries, but these holders have been reducing their holdings - China in particular.

Luke Gromen recently pointed out that shorter-term focused money managers in financial centres like Ireland and the UK and tax havens in Luxembourg and the Cayman Islands have been picking up the slack

This shift is reducing the maturity profile of US government debt, enhancing interest rate sensitivity and could result in further volatility. We expect US Treasuries to experience further bouts of stress in the quarters ahead, raising question marks regarding their status as the foundation of the financial system and the core reserve asset.

US Elections (briefly) - A Catalyst

The U.S. elections are on everyone’s mind, but as we have noted over recent months, both candidates are likely to expand the deficit and devalue the USD. This strong, long-term trend continues to drive allocators toward alternative monetary technologies, which will likely support Bitcoin.

A Trump victory looks likely and it should add short-term momentum to the crypto markets, given the higher potential for regulatory clarity. Trump has explicitly spoken about turning bitcoin into a US Treasury Reserve Asset, which would be a monumental step in bitcoin’s adoption path.

 
 

Central Banks & Tech Giants are Allocating

Interestingly, some central banks are already holding Bitcoin indirectly. The Swiss National Bank and the Bank of Norway hold stakes in MicroStrategy, a company heavily invested in Bitcoin, marking a subtle yet noteworthy adoption of the asset by central banks.

 
 

Microsoft has recently asked its shareholders to vote on whether to assess the potential benefits of investing in Bitcoin—a sign that even tech giants are seriously considering Bitcoin’s role in their future portfolios.

Bitcoin ETFs: Institutional Adoption on the Rise

With Bitcoin ETFs now approved, more than $60 billion in assets under management have flowed into these vehicles. Notably, Emory University became the first endowment to report a position in a Bitcoin ETF, meaning every major U.S. institution type—from banks and hedge funds to pensions and family offices—now holds Bitcoin through ETFs.

TradFi Meets Crypto: Stripe’s Billion-Dollar Stablecoin Acquisition

In a significant move, Stripe, a unicorn start-up and global payments leader, recently acquired the stablecoin company Bridge for $1.1 billion. This acquisition aligns Stripe with PayPal and Block Inc. (formerly Square Inc.), all of whom have integrated stablecoins into their platforms. The adoption of stablecoins by these leading companies signifies a growing convergence between traditional finance (TradFi) and crypto, setting the stage for broader crypto adoption in the future.

Conclusion: The Monetary Shift is Unmistakable

A profound rethinking of value and store of wealth is underway. Traditional pillars like U.S. bonds are losing appeal among long-term, stable holders, partly due to lack of political appetite for narrowing the deficit. Meanwhile, Bitcoin has returned to all-time highs, with central banks, tech giants, and major financial institutions taking incremental yet significant steps toward it. With the incoming U.S. President supporting Bitcoin as a Treasury reserve asset, the convergence of traditional finance and digital assets is no longer speculative—it’s happening now. The case for Bitcoin as a hedge against an increasingly unstable financial system has never been more compelling.

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Wider Deficits, Stronger Bitcoin: Connecting US Presidential Candidates