Bitcoin: The Rally Continues And I’m Still Behind It

Summary I maintain a bullish stance on Bitcoin due to its increasing popularity, higher trading volumes, and broader adoption by both retail investors and governments. The creation of Bitcoin ETFs has significantly boosted retail investor participation, legitimizing the asset class and driving prices higher. Governments, including the US, are now considering Bitcoin strategic reserves, adding a new layer of legitimacy and potential price support. Despite Bitcoin’s volatility and correlation with equities, the declining US dollar and risk-on market sentiment support further gains for BTC. Main Thesis and Background The purpose of this article is to evaluate the broader market as a whole, with a particular focus on why I see a continued bull case for Bitcoin (BTC-USD). This is due to weighing the potential pros and cons of putting money cash into this thematic idea after looking across the investment landscape and seeing which rally really has legs. While BTC has indeed come under pressure this year, it has roared back with a vengeance. Of particular note, this cryptocurrency is up over 66% since I last covered it in Q4 2024: BTC’s Performance (Seeking Alpha) Of course, it has not been a straight shot upwards (nothing ever is!). As we have seen a share of volatility in 2025, it should be no surprise that BTC has seen its ups and downs along with the market year-to-date: YTD Performance (Google Finance) With this in mind, I believe it makes sense to take a critical look at BTC to see if further gains are actually possible. It has had quite a run, but sharp sell-offs could spook some investors, and it does make sense to be cautious when an asset (any asset) is outperforming. The good news here – for those who are long or planning to be long BTC – is that I see the trend for BTC continuing in the months to come. I think the bull case remains intact and there are tailwinds swirling around that can push the price higher – despite nearing its all-time high as of the time of writing (5/12). I will discuss my outlook and the rationale behind my continued “buy” rating for this asset in detail below. Interest in Crypto Keeps Surging One of the key reasons I continue to like BTC here has to do with popularity. While that may sound a little juvenile, the fact is that Bitcoin and crypto more broadly continue to become more heavily adopted by the American and global investment community. This has been largely positive for this sector, and we can see this isn’t a small development. The trading volumes for BTC in particular have been rising over time and really spiked after the elections here in the US in November. As we moved into 2025, these volumes have remained elevated and that is an encouraging sign: Crypto Volumes (BTC and Total Market) (Coin Metrics) The net result here is that BTC and crypto are not going anywhere. If anything, it is getting more popular with investors big and small and that is bullish for prices in my view. As allocations rise that usually means prices are heading higher – this is because more people want exposure to an asset with some level of scarcity. The view I have is that this remains an emerging asset class despite how long it has been around. The number of investors with exposure remains small compared to other sectors like stocks, bonds, or other commodities. Further, higher volumes can help reduce volatility as a few big traders cannot necessarily dominate prices the way they can if fewer people own the asset. Simply put, the rising trading volumes help support the legitimacy of the sector and I only see this helping BTC going forward. In a Shift, Governments Now Embracing BTC Perhaps one of the most bullish tailwinds I see out there in the market today with respect to crypto (and specifically BTC) is how governments are beginning to embrace the idea rather than restrict. Once skeptical of losing control over currency markets, both governments and central banks are debating how they can use BTC to their advantage. One of the primary ways has been to consider the establishment of Bitcoin “strategic reserves”. This allows a government can control and “own” a level of Bitcoin in a manner similar to traditional reserves like gold and the USD. While far from a comparison to those assets right now, it is a move that could put BTC on that path in the future. Under a Trump administration, the US now seems to be on its way to making this a firm reality. In March, the White House released a statement calling for the creation of such a reserve, and I would expect other nations will follow in the short term to avoid falling behind: BTC Policy Announcement (White House) Clearly, we have seen a more “pro-Bitcoin” regulatory environment in the US. The initiation of a strategic reserve as well as some other appointments within the current administration that are proponents of the idea speaks to the general sense that the US is helping to lead the charge to legitimize this currency as a medium of exchange. If we see the US have some early success or wins in this regard, I would expect other developed nations to follow suit. Of course, I am not a US dollar skeptic nor do I think cryptocurrencies are going to “replace” fiat currency. While I see a bull case for Bitcoin continuing, I don’t have a complete lack of trust in the currency system like some do who happen to invest in this space! And I would point out that the US dollar remains the far and away favorite for international trade and finance: Percentage Of Currency Use (By Purpose) (Bank for International Settlements) What I am driving at here is I do not want to give the impression that I believe BTC is going to replace traditional currencies around the world. The US dollar remains paramount when it comes to international finance and other currencies – such as the Euro, Yen, British Pound, and Chinese renminbi – are not going anywhere either. I see BTC being a compliment to traditional currencies, not a replacement, and I don’t want to lump myself in with the US dollar skeptics out there who dominate many BTC blogs and news articles. That said, I see a world where the US dollar can still remain top dog while BTC can also thrive. That has been happening to date, and I see it continuing in the short term. So I don’t see anything insincere about suggesting both have a bright future ahead. The ETF Catalyst Really Delivered My next point is an expansion on a tailwind I talked about in prior reviews. It was the creation and deployment of ETFs on the open market targeting retail investors – giving a plethora of ways to gain exposure to this asset class beyond buying BTC directly. This was central to my prior “buy” calls on BTC because I saw this as a two-fold catalyst. One, it would increase the legitimacy of the cryptocurrency sector to see the major names in investment management offering funds to own exposure. Two, it gave easy and relatively cheap ways for retail investors to buy into this idea, fueling a retail rally that would indeed ultimately materialize. Simply, I saw this as a big win for the sector when it was starting to become a reality, and it has indeed been a win. To understand the significance, we can look at volumes again. As these ETFs hit the market, they saw a surge in demand. This has boosted prices across the sector (for BTC and other cryptos) and has also forced those fund managers to increase their holdings of BTC in order to meet redemptions should they occur. The net result has been a massive piling into BTC by said fund managers who offer these ETFs, and the result has been staggering: BTC Holdings in Publicly Traded, Private Companies, ETFs, & Countries (World Bank) The takeaway for me is that retail buying is being facilitated – in part – by the expansion of ETF products available in the market. This has given non-institutional buyers a way to easily compare and shop for the “right” fund for them, and offers options beyond going on crypto exchanges to purchase BTC. While I, personally, favor that latter approach, I recognize it isn’t the best path for everyone given how emerging and confusing this sector can be. In a nutshell, over the past few years, I saw adoption by fund managers of this idea and approval of ETFs as big catalysts for higher prices for BTC. This hypothesis has been vindicated, and I don’t believe the thesis has run its course. I see this as support for me buying BTC in the past has worked out well, and I see it as continued support for remaining a bull today. The Dollar’s Decline is Helping Push Commodities Higher Another factor behind BTC’s rise has been the decline of the value of the US dollar. This has helped crude oil rebound, pushed gold prices to record levels, and, of course, supported higher prices for BTC: USD Index (Bloomberg News) The logic here is pretty straightforward. As long as there is some weakness in the US dollar, I would expect assets priced in the US dollar – such as BTC – to see some support. This is not a “sure thing” by any means, but it does help illustrate how one can tap crypto markets to profit off a falling US dollar. Unless we see the Fed hike interest rates aggressively, which I would not expect this year, then I don’t see the US dollar stifling the returns of BTC going forward. Bitcoin is a ‘Risk-On’ Play, Similar to Tech While I continue to have a favorable view of BTC, we need to remain aware of the risks. One doesn’t have to look any further back than April to understand that this is an asset that can be very volatile. The similarity between stocks and BTC is growing increasingly correlated in this regard. While that can be “good” when investors are in risk-on mode, the reverse is also true. This is not an asset I would recommend for those who are risk-averse because the drops can be severe when they occur. Expanding on this, I would note that unlike the ETF adoption thesis, one of my other reasons for buying BTC initially has faded out a bit. This was to act as an equity hedge – hoping that BTC would deliver positive returns even when equity markets are dropping. While there was not much of a correlation when BTC first arrived on the scene, that has changed dramatically. Many of the same market and macro-forces that impact large-cap US stocks are not impacting BTC in a similar fashion. The net result is that BTC’s use as a diversifier is starting to come into question: Bitcoin vs. Tech Stocks (US) (Morningstar News) The conclusion I draw is that Bitcoin is doing less to round out a portfolio, and there is less and less chance of this being a true “hedge” when equity markets get rattled. To me, this has become just another asset to buy if one is wanting a risky play that could pay off. That doesn’t make it bad, but it does suggest it may not be for everyone. Bottom Line BTC continues its march higher, and I see more gains ahead. While the last time it breached the 100k level it swiftly pulled back, I think the market’s resumption of rewarding risky plays will send this cryptocurrency to a new record. With ETFs continuing to bring in retail dollars, global governments warming up to the prospect of owning BTC directly, and the US dollar seeing a push lower, all of this adds up to me liking BTC here. I am therefore keeping the buy rating for this asset in place and suggest that my followers give the idea some consideration at this time.

Source: Seeking Alpha