On July 14, Bitcoin surged to a new record above $122,000, marking a significant increase of over 16 percent in just a month. Charles Edwards, the founder and CEO of Capriole Investments, a digital-asset hedge fund, asserts that the market is merely in the initial phases of a larger liquidity-driven boom that could influence trends throughout 2025 and beyond.
In the latest newsletter from Capriole, Edwards explains that "money and liquidity set the stage for capital flows, with Bitcoin Treasury Companies serving as the channel." He refutes the idea that the recent $20,000 increase was merely a coincidence, instead attributing it to deep-rooted macroeconomic trends that have been developing for several months. He notes, "The most significant Bitcoin rallies happen when the market is net short on the USD," referencing Capriole’s unique "USD Positioning" gauge, which aggregates futures data for major currencies. This metric has been "deeply negative" since early summer, indicating that global investors are increasingly betting against the dollar in favor of tangible assets.
Another contributing factor is the tight spreads on BBB-rated corporate bonds, which have been narrowing since spring—a traditional indicator of risk appetite in conventional markets that has closely mirrored major Bitcoin rallies since 2020. Edwards highlights this as further evidence that Bitcoin is becoming a mainstream financial asset.
Moreover, the growth of raw money supply plays a crucial role. Global M3 has been expanding at an annualized rate of 9 percent—an exceptionally high rate that Capriole notes historically coincided with an average 12-month return on Bitcoin of around 460 percent. While Edwards acknowledges that, as a multi-trillion-dollar asset, Bitcoin may not replicate such extreme returns, he believes a substantial increase is still possible.
Capriole's analysis also examines the historical relationship between gold and Bitcoin, noting that Bitcoin typically follows gold's significant breakouts by three to four months. With gold prices expected to rise in early 2025, along with its performance against global equities, Edwards argues that this trend supports a decreasing demand for fiat currency and an increasing preference for hard assets. Since Capriole highlighted gold's movement in April, Bitcoin has appreciated by 28 percent.
Equity markets are also showing positive signals. The New York Stock Exchange's advance-decline line reached new highs last week, while Capriole’s "Equity Premium" indicator reset to zero in late May—both of which historically correlate with extended periods of increased risk appetite. These indicators feed into Capriole’s Bitcoin Macro Index, a composite of various public and proprietary data points that guide trading exposures in their fund. Edwards reports that the index remains in strong positive growth territory, indicating that the fundamental drivers—liquidity, risk sentiment, and on-chain activity—are still robust.
Perhaps the most notable development is the rise of Bitcoin Treasury Companies (TCs)—corporate entities that raise fiat capital through equity or debt markets to invest directly in Bitcoin. Edwards describes TCs as the new "primary bubble dynamic of this cycle." In the second quarter, inflows into TCs reached $15 billion, with at least 145 firms now employing this strategy. With their market valuations buoyed by unrealized gains from Bitcoin holdings, these companies can secure increasingly larger funding rounds, which Edwards believes could add over $1 trillion to Bitcoin's market capitalization within the next year.
Edwards dismisses concerns regarding unhealthy centralization, arguing that for Bitcoin to evolve into a base currency, it must scale to tens of trillions in market cap to stabilize volatility. "The only way this happens is through mass acquisition, as we are witnessing now," he states. His analysis takes a long-term perspective, acknowledging that significant Bitcoin rallies often precede sharp pullbacks. He emphasizes that the newsletter focuses on broader trends and key drivers for the upcoming six months rather than short-term fluctuations.
With ample central-bank liquidity, a crowded short position in the dollar, subdued credit stress, and a new wave of corporate buyers entering the market, Capriole's conclusion is clear: the liquidity flow is substantial, and the Bitcoin supercycle is just beginning. Edwards concludes, "While today’s early adopters may be viewed as speculators, hindsight will reveal the truth. Following the wave of Treasury companies, we will see the government treasury wave in the next cycle. We are simply riding the adoption curve that necessitates trillions of dollars flowing into Bitcoin from those who possess it to achieve scale." At the time of reporting, Bitcoin was trading at $122,438.
