In bitcoin ’s 4-year cycles, there has always been a distinct driver of selling pressure. In 2018, we saw the promise of crypto running ahead of its skis; the market drove up valuations of crypto projects far beyond their nascent stages of development that led to selling once participants understood the reality. In 2022, leveraged blow ups brought several forced sellers, such as Celsius and FTX, which pressured crypto prices. The most recent overhang on the market has been Strategy (MSTR), whose evolving capital structure drove concerns of potential BTC sales to meet dividend obligations. The good news is that MSTR took concrete steps to placate said concerns, shoring up its USD reserve and updating its capital allocation strategy, buying time for BTC to recover. The market can now look past this and evaluate BTC on its own merits.
The BTC story remains relevant as ever
BTC’s role as sound money resonates as the money supply continues to increase, surpassing $23 trillion for the first time in May. What’s notable is that the month-over-month jump was over 1% and the highest since 2021, a marked acceleration from prior months. Bitcoin remains a solution to rapid expansion of the money supply. While attention has drifted away from this to the Iran conflict and AI, BTC is poised to swing back to this dynamic.
Unlike its peer store of value asset, gold, BTC was designed to be easily divisible and portable. And its fixed supply of 21 million BTC still holds. There is value in this kind of neutral asset and allocators should continue to take note.