#TrumpBTCTreasury

How the Strategic Bitcoin Reserve could change everything

Unlike past cycles propelled by catalysts such as the ICO boom in 2017 or the DeFi Summer of 2020, the current cycle is driven by a regulatory shift, including the SEC’s supportive stance on crypto and the proposed Strategic Bitcoin Reserve. 

The crypto market is increasingly aligned with global macro trends, mirroring tech equities in their longer, more stable cycles. In the current cycle, Bitcoin exhibits a stronger correlation with traditional financial markets, alongside abnormally low volatility. 

Institutional investors have now become the primary drivers of Bitcoin’s price movements. This can be demonstrated by open interest in CME Bitcoin futures, which rose from under $4 billion before the approval of ETFs to a consistent level above $10 billion, with peaks above $20 billion. 

However, CME’s open interest may be inflated by institutional investors, who use leverage to profit from the spread between spot ETFs and futures when the basis exceeds the US Treasury yield. If these basis arbitrage positions are unwound at scale, they could trigger sharp price declines through spot ETF outflows.