The Real Narrative Behind Bitcoin That You Need To Know

Summary Bitcoin’s price is driven by institutionalization and regulation. Not safe-haven demand, making it more akin to the S&P 500 than gold. Key catalysts include regulatory moves like the Genius Act and political dynamics undermining monetary policy credibility. In my opinion, we can talk about institutionalization, until proven otherwise, an “anti‑liberalization” of Bitcoin. But this certainly doesn’t mean less demand. But watch out for traps. With increasing overextension, the attractiveness of taking a position could decrease compared to “alts”. Bitcoin does not follow macroeconomics, but above all, it is not a safe haven asset. At least not right now. What drives the price of Bitcoin is not fear, but rather a de‑liberalization, or better said, a phase of institutionalization/regulation that could be truly epochal. Here’s my opinion: we must not make the mistake of treating it like gold; perhaps we should make the effort to treat it more like the S&P 500 . And now that the market has flipped the risk‑on switch, my attention once again turns to Bitcoin. And not only that . But first, let me share with you … My bullish view on BTC It diverges from the idea that a weak dollar and expectations of a rate cut are a panacea for BTC demand. I prefer to identify two other catalysts: institutionalization, and monetary instability. Simply, two threads: The “fight” between President Donald Trump and Jerome Powell The Genius ACT. Not tariffs: I consider it too simplistic to say that Bitcoin demand increases because of the instability generated by tariffs. It would be like supporting the classic dynamic “bitcoin = safe asset haven,” which we have seen does not match real danger situations.For those who still embrace Bitcoin today as a challenger to the modern monetary system, I think following the two narrative threads I have identified is more consistent. The two catalysts to remember Simply put, the fact that the president Donald Trump directly steps in to undermine Powell , and by doing so influences monetary policy decisions, is an important historical inconsistency. For Bitcoin it’s as if its fiercest enemy were saying: “hey, you were right, we’re not that efficient.” Of course, this part of my analysis is more storytelling than data‑driven analysis, but I can’t help finding in it a very theatrical, fascinating narrative. Especially when I frame the story with the stablecoin regulation process, defined as the Genius Act: here, I find a logical reason in the weakness of the dollar, but also in Gary Gensler’s exit from the SEC and, coming back to us, the introduction of a new monetary system.Therefore, both the Genius Act, and the Clarity Act (regulatory framework for crypto) and the Anti‑CBDC Surveillance State Act . In one word: institutionalization. Makes you think, doesn’t it? A bullish phase, because it increases demand, but not so close to the “liberal” concept of Bitcoin from 2010, even though that propaganda is still very much alive among supporters; but let’s see if between this narrative and the data there is actually a formal correlation. In numbers: If I look for signs of institutionalization, first of all I look at the flows in the USA spot Bitcoin ETFs: and I notice that they have over 138 billion $ in AUM. Not really a typical feature of a market with less than 3 years of experience. IBIT: Example of AUM of the most capitalized ETF (Seeking Alpha) Another sign of institutionalization? the volatility, hasn’t anyone noticed a drop in Bitcoin’s volatility? How many remember 2021, when you woke up in the morning and realized that during the night the portfolio had registered a positive fluctuation of 10% and then maybe negative of 15%? Well the 30 day rolling volatility drops to 35% , while before 2022 it was over 100%. IBIT – Example of how volatility has halved compared to the average (Seeking Alpha) But do you know what confirms to me that the bullish movement is driven by this (allow me the term) artificial process? The comparison with a real safe asset heaven: Bitcoin has a trend substantially disconnected from gold , which actually is ONLY a safe asset heaven, even if the dollar is falling. But what does this discrepancy really mean? In essence, that the market is not looking for protection, but risk . Data by YCharts And if Bitcoin is in demand, it means that it is treated more like an S&P 500 , signal of the fact that it follows “earnings drivern” narratives, even if naturally it has no earnings, but more similar to the accumulation methodologies of institutions. Data by YCharts Risk: “Yes, alright, it may make sense, so will it keep growing endlessly?” In the end, that’s what we really want to know.Let’s look at some numbers:Of Bitcoin traders, 86% are in profit, 13% at break‑even , and only 1% in loss. Simply put, if we’re at ATH, how is it possible that 13% are at break‑even? Here’s the point, after all these words, I’ve come to this to tell you that this piece of information can be read by many in a contrarian sense. It basically shows there are a lot of buyers at the highs, which becomes even more worrying if you consider a Large Transactions Volume of $164.28B : clearly a sign of euphoria but also of strong hands intervening, who tend to play on these retail imbalances. (Of course, this is my personal opinion.) IBIT (Seeking Alpha) Well, it’s a risk, especially considering that this is the first year Bitcoin’s price is below the stock‑to‑flow level at 463 days in the yellow range of the post‑halving day distribution. It’s anomalous. Bear market … or alt season If you got scared, know that this is not enough for me to call a downgrade on Bitcoin. Because the narrative is still promising in my opinion. Rather, this seems to me like a typical phase of an alt season, that is, a market phase in which very positive idiosyncratic drivers develop for smaller cryptocurrencies. Data by YCharts In other words, it is statistically likely that, with Bitcoin already in an upper‑extreme zone, the market could shift part of its resources toward alternative assets, potentially those that have been “left behind,” and of course ETH immediately comes to mind, and I’ve talked about it here as well. An element that, in fact, would remain close to the institutionalized narrative, considering the launch of ETFs. Conclusion To conclude, I remain close to the bullish narrative on BTC, while keeping an eye on the imbalance in the distribution of demand and supply, which could generate short‑term volatility, such as a fake breakout above the highs. In this sense, I look favorably on alternatives, and I think the market will too. In particular, ETH.

Source: Seeking Alpha