Accelerated institutional adoption of Bitcoin: US 401(k) investment channels open, ETFs and corporate entities continue large-scale accumulation.
The best environment since 2021: global liquidity is at historical highs, and major countries are in a rate-cutting mode.
Transitioning from a retail-dominated to an institution-dominated market: despite overheating signals, institutional buying strongly supports downside risks.
Global liquidity expansion, institutional accumulation, and regulatory tailwinds drive Bitcoin adoption.
Currently, there are three core drivers pushing the Bitcoin market: 1) an ever-expanding global liquidity, 2) accelerated institutional capital inflows, and 3) a crypto-friendly regulatory environment. These three factors are simultaneously at play, creating the strongest upward momentum since the 2021 bull market. Bitcoin is up about 80% year-on-year. In the near to medium term, factors that could disrupt this upward momentum are limited.
A standout point regarding global liquidity is that the M2 money supply of major economies has surpassed $90 trillion, reaching a historical high. Historically, the growth rate of M2 and Bitcoin prices have shown similar directional patterns, and if the current monetary expansion continues, there is still room for further appreciation (Chart 1).
Additionally, President Trump’s pressure for rate cuts and the Federal Reserve's dovish stance have paved the way for excess liquidity to flow into alternative assets, with Bitcoin being the main beneficiary.
Meanwhile, institutional accumulation of Bitcoin is proceeding at an unprecedented pace. US spot ETFs hold 1.3 million BTC, about 6% of total supply, while Strategy (MSTR) alone holds 629,376 BTC (worth $7.12 billion). The key here is that these purchases represent structural strategies rather than one-off trades. Strategy is continuously buying through the issuance of convertible bonds, particularly signaling that a new layer of demand is forming.
Additionally, the executive order issued by the Trump administration on August 7 represents a game-changing factor. Opening Bitcoin investments to 401(k) retirement accounts means potentially tapping into an $8.9 trillion capital pool. Even a conservative allocation of 1% would mean $89 billion, about 4% of Bitcoin's current market value. Given the long-term holding nature of 401(k) funds, this development should not only help with price appreciation but also contribute to reducing volatility. This marks a clear shift of Bitcoin from a speculative asset to a core institutional holding.
Institutional-driven trading volume, retail activity receding.
The Bitcoin network is currently reorganizing around large investors. The average daily transaction count has dropped 41% from 660,000 transactions in October 2024 to 388,000 transactions in March 2025; however, the amount of Bitcoin transferred per transaction has actually increased. The growing number of large trades from institutions like Strategy has expanded the average trade size. This marks a shift in the Bitcoin network from a 'small high-frequency' to a 'large low-frequency' trading model (Chart 2).
However, fundamental indicators show imbalanced growth. While institutional restructuring is clearly driving the Bitcoin network value higher, the number of transactions and active users has yet to recover (Chart 3).
Improvements in fundamentals need to be activated through BTCFi (Bitcoin-based decentralized financial services) and other initiatives, but these are still in the early stages of development and require time to have a meaningful impact.
Overbought, but institutions provide bottom support.
On-chain indicators show some overheating signals, but significant downside risks remain limited. The MVRV-Z indicator (which measures the current price relative to the investors' average cost basis) is in the overheating zone at 2.49 and recently surged to 2.7, warning of a possible short-term correction (Chart 4).
However, the aSOPR (1.019, tracking realized profits and losses of investors) and NUPL (0.558, measuring the overall unrealized profits and losses in the market) remain in stable zones, indicating overall market health (Charts 5, 6).
In short, while the current price is relatively high compared to the average cost basis (MVRV-Z), actual selling occurs at moderate profit levels (aSOPR), and the overall market has yet to reach an over-profit region (NUPL).
Supporting this dynamic is institutional buying power. Continuous accumulation from entities like ETFs and Strategy provides solid price support. A correction may occur in the short term, but a trend reversal seems unlikely.
Target price $190,000, potential upside space 67%.
Our TVM (Time Value Model) approach derives a target price of $190,000 through the following framework: we set a base price of $135,000 (removing extreme fear and greed sentiment from the current price) and then apply a +3.5% fundamental indicator multiplier and a +35% macro indicator multiplier.
The fundamental indicator multiplier reflects an improvement in network quality: although the number of transactions has decreased, the transaction value is higher. The macro indicator multiplier captures three powerful forces: continuously expanding global liquidity (e.g., M2 exceeding $90 trillion), accelerated institutional adoption (e.g., ETFs holding 1.3 million BTC), and an improved regulatory environment (e.g., 401(k) eligibility opening up an $8.9 trillion capital pool).
At current levels, this implies a 67% upside potential. While the target is aggressive, it reflects the structural changes occurring as Bitcoin transitions from a speculative asset to an institutional portfolio allocation.
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