Bitcoin punched a fresh record of over $122,000 on the morning of July 14th, extending its month-long rally to over 16%. Against this backdrop, Charles Edwards (founder and CEO of Capriol Investment, a digital asset hedge fund) acknowledges that it is only in the “early stage” of a much broader liquidity-driven boom that could control the rest of 2025 and beyond.

Bitcoin Liquidity Super Cycle

In the latest Capriol newsletter, Edwards argues that “money and liquidity provide a capital flow background, and Bitcoin finance companies are the funnels.” He dismisses the idea that the $20,000 advance over the past two weeks is a technical accident and instead refers to deep macro currents that have been built for months.

“The biggest bitcoin rallies occur when the market is net shortage of USD,” he writes, pointing to Capriol’s own “USD positioning” gauge, aggregating futures data across major currencies. The metric has been “deeply negative” since early summer, indicating that global investors are critically betting on the dollar and supporting hard assets.

Related readings

Another pillar is credits. The BBB rated corporate bond spread has been shattered more closely since 2020 since spring, a classic risk-on signal in the traditional market that has nearly mapped tics to major Bitcoin up maubes. “More evidence,” Edwards says, “Bitcoin is a Tradfi asset.”

Perhaps the strongest tail wind is the growth of raw money. Global M3 is enlarged with 9% clips per year. This is a historically extreme rate that Capriol has stated that it ultimately coincided with an average 12-month Bitcoin return of around 460%. Edwards warns that Bitcoin is unlikely to repeat its size as a trillion dollar asset today.

Capriole’s framework is also based on the historical lead rug relationship between gold and Bitcoin. Once bullion entered a meaningful breakout, Bitcoin tended to continue after 3-4 months. Gold’s early 2025 surge and its outperformance and global stocks therefore provided “a strong support for the decline in demand for fiat money in the current market and the favor of hard money,” Edwards argues. Bitcoin has risen 28% since Capriol flagged the gold move in April.

The stocks also offer green lights. The New York Stock Exchange Advance and Deklein lines lost to new highs last week, but Capriol’s “Equity Premium” indicator reset to zero in late May.

All of these data points are fed to the company’s flagship Bitcoin macro index, a combination of numerous public and proprietary variables that Capriol uses to form the fund’s trading exposure. Even after the latest vertical movement of the coin, the index is “still in a strong, positive growth area,” reported Edwards. It suggests that the underlying drivers – fluid, risk emotion, and chain activity “stays intact.”

Bitcoin Ministry of Finance – Company Flywheel

But perhaps the most striking piece of the puzzle is outside of pure macros. Edwards highlights the emergence of Bitcoin Finance Companies (TCS). It will organize vehicles raising fiat capital in the equity or debt market and roll out to Spot BTC as a new “major bubble dynamics of this cycle.”

Related readings

The quarterly inflow into TCS reached $15 billion in the second quarter, with Capriol having at least 145 such companies pursuing their strategy. In the market capitalization expanded on balance sheet coin paper, Edwards believes “is likely to help add more than $1 trillion to Bitcoin’s market capitalization next year,” they expand on balance sheet coin paper.

He rejects the notion that this corresponds to unhealthy centralization. “If Bitcoin is one day a basic money, we need to scale it to tens of trillions to flatten the volatility.

Edwards emphasizes that his analysis is on the horizon for months. “When Bitcoin sees a massive gathering, there’s always a strong pullback and local overheating,” he admits, adding that the newsletter intentionally sidelines short-term on-chain bubbles, focusing on “the big picture and driving factors for the next six months.”

Still, Capriol’s conclusions are clear as Central Bank’s liquidity is abundant, dollars are crowded, credit stress is calming, and a structurally new pool of corporate buyers intervening. The liquidity tap is wide open and only supplied with Bitcoin Supercycle.

“The early adopters today may be considered speculators, but that will become very obvious in hindsight. After the Treasury waves become the government’s financial waves (the next cycle).

At the time of pressing, BTC was traded for $122,438.

Featured images created with dall.e, charts on tradingview.com

A closely followed economist thinks that the Bitcoin (BTC) and crypto bull market still has room to run to the upside.

Alex Krüger tells his 205,000 followers on the social media platform X that crypto investors are disappointed because the current cycle appears to be different from the ones witnessed in the past in terms of time and upside magnitude.

But the economist says that investors should zoom out because he thinks crypto is in the midst of a supercycle.

“BTC is stuck in a range, which I think eventually resolves higher. The supercycle theory is intact.

Even though it applies to Bitcoin and crypto as a whole (market cap ex BTC and stables is considerably higher), most old alts don’t benefit from it on a sustained basis.

Should not expect an insane wave of liquidity driving all cr*p higher for an extended period of time. Be selective.”

According to Krüger, a supercycle doesn’t mean that Bitcoin will keep going higher without witnessing painful pullbacks.

“My definition has been playing out: BTC trades in line with equities [but with] shorter smaller drawdowns, e.g. 40% rather than 80%-90%.”

Looking at Solana, Krüger calls SOL the “fastest horse,” but he warns that the altcoin is set to see “very heavy unlocks in the next two months,” meaning that more supply is about to enter circulation.

As for Ethereum (ETH), the trader notes that the largest layer-1 protocol needs a shot in the arm to ignite bullish momentum.

“Ethereum … needs an intervention. Increased value capture from L2s (layer-2s). Plus a few more killer apps running on it.”

Turning to the broader altcoin market, Krüger says that he expects a new altseason to emerge but it will likely not be as explosive as the rallies seen in previous years.

“Expect a new alt season at some point. Shorter and smaller than prior ones. Positioning is very negative, and so is sentiment. but timing is unclear in the absence of clear catalysts. It can come out of nowhere.”

Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox

Check Price Action

Follow us on X, Facebook and Telegram

Surf The Daily Hodl Mix

&nbsp

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Generated Image: Midjourney