With MSTR concerns assuaged, look to traditional signals around BTC

Hi readers,

Welcome to our institutional newsletter, Crypto Long & Short. This week:

BTC is reaching a market bottom and is poised for a turnaround, writes Martin Gaspar.
Top headlines institutions should pay attention to by Francisco Rodrigues.
“Ether.Fi Continues to Lead the Neobank Meta” in Chart of the Week.

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– Alexandra Levis

Expert Insights

Prevailing Currency in Digital Assets: Infrastructure

- By Caue Teixeira, CTO, Nonco

In bitcoin (BTC)’s 4-year cycles, there has always been a distinct driver of selling pressure. In 2018, we saw the promise of crypto running ahead of its skis; the market drove up valuations of crypto projects far beyond their nascent stages of development that led to selling once participants understood the reality. In 2022, leveraged blow ups brought several forced sellers, such as Celsius and FTX, which pressured crypto prices. The most recent overhang on the market has been Strategy (MSTR), whose evolving capital structure drove concerns of potential BTC sales to meet dividend obligations. The good news is that MSTR took concrete steps to placate said concerns, shoring up its USD reserve and updating its capital allocation strategy, buying time for BTC to recover. The market can now look past this and evaluate BTC on its own merits.

The BTC story remains relevant as ever

BTC’s role as sound money resonates as the money supply continues to increase, surpassing $23 trillion for the first time in May. What’s notable is that the month-over-month jump was over 1% and the highest since 2021, a marked acceleration from prior months. Bitcoin remains a solution to rapid expansion of the money supply. While attention has drifted away from this to the Iran conflict and AI, BTC is poised to swing back to this dynamic.

Unlike its peer store of value asset, gold, BTC was designed to be easily divisible and portable. And its fixed supply of 21 million BTC still holds. There is value in this kind of neutral asset and allocators should continue to take note.

Understanding market signals

With sentiment around MSTR turning from hysteria to calm, investors can return to monitoring classic market signals around bitcoin. One such signal is the BTC ETFs, which experienced $5.4 billion of outflows YTD through June 30. The nuance here is that this was a recent phenomenon, with $8.2 billion of outflows since May 12, likely reflecting MSTR concerns and a freeing of capital around the SpaceX (SPCX) IPO. With both of these partially in the rearview mirror, sustained ETF inflows will signal stabilization of market confidence. Supporting this, BTC’s Coinbase premium has improved considerably since the end of the quarter, signaling investor appetite may be coming back.

There are also signs of seller exhaustion and believer accumulation. As seen in prior market bottoms, BTC can find a floor when few sellers remain and when accumulation from holders with conviction picks up. This is playing out with around 45% of long-term holder supply sitting at a loss, per data from Checkonchain, with levels associated with prior market bottoms. It suggests many of the sellers are already out, leaving only convicted holders, who are not only able to withstand the volatility but who may also be adding to their positions. This is showing up in the data, with BTC supply held by long term holders climbing to a record high in recent weeks. Meanwhile, on-chain movements of longer-held BTC have abated from last year, alleviating earlier pressures.

The situation today

BTC has been in a down market since October, fighting a rotating set of headwinds largely unrelated to bitcoin’s underlying attributes. The question now is what happens when those headwinds change to tailwinds. With growth in money supply accelerating, sentiment and momentum could soon turn around.

Headlines of the Week

- By Francisco Rodrigues

Headlines of the week

This week’s headlines show Strategy (MSTR) has become an active capital manager rather than a passive bitcoin holder, while Circle and Tether are facing new competition from a giant stablecoin-focused initiative. Meanwhile, U.S. President Donald Trump has faced significant backlash over his family’s crypto earnings.

Strategy authorizes $1.25 billion in bitcoin sales, lifts STRC dividend to 12%: The firm’s new Digital Credit Capital Framework introduced a series of initiatives to perverse long term bitcoin exposure. It includes a $2.55 billion cash reserve and cleared $1 billion each in preferred and common equity buybacks, along with a Bitcoin Monetization Program allowing it to sell BTC.
Stripe, Coinbase and BlackRock back new Open USD stablecoin network: More than 140 firms launched OUSD, a dollar stablecoin with no minting or redemption fees that returns most reserve earnings to partners, inverting the economics that built leading stablecoin firms Circle and Tether.
UK's bold new crypto rules promise to unlock global trading, but huge compliance hurdles still threaten the rollout: The framework and covers exchanges, custodians, stablecoin issuers, staking providers and DeFi operators with an identifiable controlling entity, giving institutions the legal certainty to deploy capital in the UK.
New York Life makes tokenization debut with $807 billion behind it: The firm's first tokenized fund, HYB, lets investors subscribe and redeem in USDC while New York Life keeps the underlying portfolio.
Trump pocketed more than $1 billion from crypto ties as industry headed toward slump: The sum was the largest portion of a $2.2 billion disclosure, outstripping his real estate and resort earnings, and drew renewed conflict-of-interest criticism the White House denied.

Chart of the Week

Ether.Fi Continues to Lead the Neobank Meta

Backpack's tokenized equity spot DEX volume ramped sharply through mid-June, peaking near ~$150 million on 16 June before cooling into the back half of the week. Rather than lagging the activity, BP tracked it - and arguably led - climbing from ~$0.27 to ~$0.67 over the window (roughly 2.5x), and grinding higher even as daily volumes faded toward June 20–21.

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