This Will End Bitcoin…

Key Concepts

• Bitcoin Treasury Companies: Corporations that hold Bitcoin on their balance sheets as part of their investment strategy.
• Systemic Risk: The risk of collapse of an entire financial system or market, as opposed to risk associated with any one individual entity, group or component of a system.
• Leveraged Bet: Using borrowed money to increase the potential return of an investment.
• Macroeconomic Environment: The overall state of the economy, including factors like liquidity, interest rates, and currency strength.
• Risk-On Environment: A market condition where investors are willing to take on more risk, often leading to increased investment in assets like stocks and cryptocurrencies.
• Risk-Off Environment: A market condition where investors become more risk-averse, leading to a shift towards safer assets like bonds and gold.

Corporate Bitcoin Adoption and its Impact on Price

Current Landscape of Corporate Bitcoin Investment

• Significant Capital Inflow: Companies have raised $19 billion this year, with all of it reportedly invested in Bitcoin. Trump Media is also set to raise $2.5 billion for Bitcoin investment.
• Growth of Bitcoin Treasury Companies: The number of corporations holding Bitcoin on their balance sheets has accelerated significantly.
  • Since 2023, there hasn't been a single day without at least one Bitcoin treasury company buying Bitcoin.
  • In June 2025, an average of 26 different corporations were accumulating Bitcoin daily.
  • The number of companies with a Bitcoin Treasury strategy grew from 5 in 2020 to over 150 today, a 30-fold increase in 5 years.
• Performance of Bitcoin Treasury Companies:
  • Bitcoin has returned approximately 1500% over the past 5 years.
  • MicroStrategy, a leading Bitcoin treasury company, has returned 2,200%.
  • Specific examples of strong performance include:
    • Metaplanet (Japan): Up 151% since April 2025.
    • H100 (Sweden): Up 600%.
    • Smart Webb (UK): Up 3,000% over the same period.

Mechanism of Price Influence

• Demand Driver: The wave of corporate accumulation has been a fundamental demand driver for Bitcoin.
• Supply Shrinkage: Bitcoin has a fixed supply of 21 million tokens, with nearly 95% already in circulation. As Bitcoin treasury companies absorb more of this circulating supply, the available market supply shrinks.
• Price Correlation: The rapid climb in the number of Bitcoin treasury companies starting in 2023 coincided with Bitcoin's price increase.
• Increased Holdings: Bitcoin treasury companies' collective holdings have grown from 1.35% of the circulating supply at the beginning of 2024 to 4.7% today, a threefold increase in two years.
• Upward Pressure: Reduced supply coupled with growing demand from institutions, retail investors, and treasury companies naturally builds upward pressure on Bitcoin's price.

Systemic Risk and Potential Downside

Emergence of Systemic Risk

• Warning from Coinbase: Coinbase's global head of research has warned that publicly traded Bitcoin vehicles introduce substantial systemic risk to the broader ecosystem.
• Potential for Net Sellers: While currently net buyers, these companies could become net sellers. Given their significant holdings, this shift could pose a systemic risk.
• Leveraged Bets: These companies are employing leveraged bets on Bitcoin, amplifying their exposure.
• Vulnerability to Macroeconomic Shifts: The current favorable macroeconomic environment has facilitated these leveraged positions. A reversal in these conditions could lead to rapid liquidation and price declines.

Historical Precedents and Case Studies

• Terra Luna Ecosystem (May 2022):
  • The Terra Luna ecosystem had accumulated a massive Bitcoin reserve for its stablecoin strategy.
  • Unfavorable macroeconomic conditions led to a decline in the US stock market, dragging Bitcoin down.
  • Terra was forced to liquidate its Bitcoin holdings, injecting billions of dollars worth of Bitcoin into the market, causing a 40% price plunge in a few weeks.
  • This illustrates how large corporate players can fuel uptrends in favorable conditions but accelerate downside moves when conditions reverse.

Favorable Macroeconomic Conditions Fueling Current Trend

• Expanding Global Liquidity: Global liquidity has been expanding at one of the fastest rates since 2020 and remains near record highs.
• Weakening US Dollar: The US dollar index has fallen by approximately 12% since the start of 2025, marking the steepest decline since the 1970s.
• Risk-On Environment: The combination of rising liquidity and a weak dollar has created an ideal backdrop for risk assets, including the US stock market and Bitcoin.
• Correlation with US Stocks: Historically, Bitcoin tends to follow the US stock market in an environment of easy liquidity and trending higher stocks. The past couple of years have exemplified this correlation.

Bitcoin's Valuation and Future Outlook

Bitcoin Relative to Gold

• Stagnant Relative Market Cap: Bitcoin's price measured in terms of gold has not grown relative to gold since early 2021.
• Undervalued Perspective: Considering the significant developments since 2021 (corporate buying, government recognition, institutional recommendations), Bitcoin appears undervalued relative to the scale of interest.

Current Risk Assessment and Strategy

• Not a Major Tail Risk (For Now): Given the still favorable macro conditions, Bitcoin treasury companies are not currently considered a major tail risk.
• Potential for Speculative Frenzy: This adoption could quickly turn into a speculative frenzy as Bitcoin's price rises.
• Threat Upon Macroeconomic Shift: The moment the macroeconomic backdrop shifts, it could represent a real threat to Bitcoin's performance.
• Strategic Approach: The presented strategy emphasizes being in crypto when conditions are right and out when they are wrong, aiming to limit losses and capitalize on opportunities. This approach has reportedly led to multiple double-digit trades with limited losing trades.

Conclusion

The current surge in Bitcoin's price is significantly driven by a growing number of corporations adopting a Bitcoin treasury strategy. These companies, leveraging favorable macroeconomic conditions and corporate debt, are accumulating Bitcoin, thereby reducing its available supply and creating upward price pressure. While this trend reflects a genuine adoption of Bitcoin as a financial asset and has led to impressive returns for these companies, it also introduces systemic risk. The leveraged nature of these investments makes them vulnerable to shifts in the macroeconomic environment. Historically, such shifts have led to rapid price declines, as seen with the Terra Luna collapse. Despite the current favorable conditions, the potential for a speculative frenzy and the inherent volatility of macroeconomic factors suggest that a cautious and strategic approach to investing in cryptocurrencies is warranted. The current valuation of Bitcoin relative to gold also suggests potential for further upside, but the risk of a sharp correction remains if macroeconomic conditions deteriorate.