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Bitcoin punched via a recent document above $122,000 on the morning of 14 July, extending its month-long rally to greater than 16 p.c. In opposition to that backdrop, Charles Edwards—the founder and chief govt of digital-asset hedge fund Capriole Investments—argues that the market is simply “within the early phases” of a much wider liquidity-driven growth that would dominate the remainder of 2025 and past.
The Bitcoin Liquidity Supercycle
Within the newest Capriole newsletter, Edwards contends that “cash and liquidity supplied the backdrop for capital flows, and Bitcoin Treasury Firms are the funnel.” He dismisses the concept that 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 most important Bitcoin rallies happen when the market is web quick the USD,” he writes, pointing to Capriole’s proprietary “USD Positioning” gauge, which aggregates futures knowledge throughout main currencies. The metric has been “deeply damaging” since early summer season, signalling that international traders are decisively betting towards the greenback and in favour of laborious belongings.
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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 virtually tick-for-tick onto main Bitcoin up-moves. “Extra proof,” Edwards notes, “that Bitcoin is a tradfi asset.”
Maybe the strongest tail-wind, nevertheless, is uncooked cash progress. World M3 has been increasing at an annualised 9 p.c clip—an traditionally excessive charge 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 right this moment, 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 comply with three to 4 months later. Gold’s early-2025 surge—and its outperformance versus international equities—subsequently supplied “sturdy assist for the present market’s diminishing demand for fiat cash and favour of laborious 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 Trade advance–decline line broke to new highs final week, whereas Capriole’s “Fairness Premium” indicator reset to zero in late Could—each traditionally according to multi-month stretches of increasing threat urge for food.
All of these knowledge 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 sturdy optimistic progress territory,” Edwards experiences, even after the coin’s newest vertical transfer. That implies 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 autos that elevate fiat capital in fairness or debt markets after which deploy it into spot BTC—as the brand new “major bubble dynamic of this cycle.”
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Quarterly inflows into TCs reached $15 billion in Q2, and Capriole counts at the very least 145 such companies now pursuing the technique. With their market capitalisations inflated by paper positive factors on balance-sheet cash, they will faucet ever-larger funding rounds—a reflexive loop that Edwards believes “will doubtless assist add over $1 trillion to Bitcoin’s market cap over the subsequent yr.”
He rejects the notion that this quantities to unhealthy centralisation: “If Bitcoin is to at some point change into base cash, it must scale to tens of trillions to flatten volatility. The one means that occurs is mass acquisition like we’re seeing right this moment.”
Edwards stresses that his evaluation sits on a months-long horizon. “When Bitcoin sees big rallies there are all the time sturdy pullbacks and native overheating,” he concedes, including that the publication intentionally sidelines short-term on-chain froth to give attention to the “greater image and driving elements for the subsequent six months.”
Nonetheless, with central-bank liquidity considerable, the greenback crowded quick, credit score stress muted and a structurally new pool of company consumers stepping in, Capriole’s conclusion is unambiguous: the liquidity faucet is extensive open, and the Bitcoin supercycle it feeds has solely simply begun.
“Whereas right this moment’s early adopters could also be seen as speculators, it is going to 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 stream in to Bitcoin from the entities which have it in an effort to obtain scale,” Edwards concludes.
At press time, BTC traded at $122,438.
Featured picture created with DALL.E, chart from TradingView.com
