MicroStrategy's Bitcoin Dominance
Also Bitcoin's NASDAQ Dance: The Critical Tech Stock Correlation & Bitcoin's Double Challenge: Yield Curve Inverts as Fed Resists QE
Welcome to Ecoinometrics' Friday edition.
Each week, we analyze the three most critical market signals impacting Bitcoin and macro assets, delivering institutional-grade insights through data-driven charts and analysis.
Today we'll cover:
MicroStrategy's Bitcoin Dominance
Bitcoin's NASDAQ Dance: The Critical Tech Stock Correlation
Bitcoin's Double Challenge: Yield Curve Inverts as Fed Resists QE
These three charts tell an interconnected story: corporate adoption remains concentrated but holds massive untapped potential, Bitcoin's price action remains tethered to tech stocks at a crucial technical juncture, and the broader economic picture is sending mixed signals that could challenge Bitcoin's near-term performance. Let's dive deeper into what the data reveals.
In case you missed it, here are the other topics we covered this week:
Essential Decision-Making Tools
Bitcoin Market Monitor - Key Drivers in Five Charts:
Bitcoin Market Forecast - Probability Scenarios & Risk Metrics:
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MicroStrategy's Bitcoin Dominance: Public Company Holdings Reach 506,000 BTC
MicroStrategy bought another ~7,000 Bitcoin this week, pushing their total treasury to 506,000 BTC.
For perspective, this matches the entire amount captured by spot Bitcoin ETFs since their launch.
The impact on price is significant even if smaller than the ETFs. While MicroStrategy accumulated over 4.5 years versus one year for the ETFs, their buying pattern shows a clear acceleration. They've ramped up purchases dramatically in the second half of last year.
Some Bitcoin miners followed MicroStrategy's lead in late 2024, but the scale difference is striking. As shown in the chart, even the largest Bitcoin-holding public companies after MicroStrategy - Marathon and Riot - hold just 46,000 BTC and 19,000 BTC respectively.
Beyond MicroStrategy and miners, public companies aren't buying Bitcoin at scale. This reveals two important insights.
First, Michael Saylor's five years of Bitcoin advocacy hasn't convinced many corporate treasuries to make significant investments yet.
Second, it points to enormous untapped potential. S&P 500 companies currently hold approximately $2.5 trillion in cash reserves according to some estimates. If just 5% of these companies allocated even a small fraction of this cash to Bitcoin, it would generate demand several times larger than what we've seen from ETFs.
The market impact could be substantial. Remember, half a million Bitcoin purchased in one year essentially doubled BTC's price. Corporate treasury adoption represents both the current limitation and perhaps the most significant future catalyst for Bitcoin price appreciation after the ETFs.
Bitcoin's NASDAQ Dance: The Critical Tech Stock Correlation
Bitcoin is no longer an independent player in the market (it hasn’t been for a long time actually).
As we discussed on Wednesday, Bitcoin behaves like a high-beta play on the NASDAQ 100.
Even more significant than Bitcoin's beta to the NASDAQ (which changes with market conditions) is the strong relationship between Bitcoin's log-price and the NASDAQ 100 price.
The chart below shows this long-standing and statistically significant relationship.
This connection means these two assets grow together over time. When you look at the big picture, their growth patterns align.
This insight tells us something crucial: Bitcoin and the NASDAQ are driven by the same forces when it comes to long-term market cycles. This is key information when planning your portfolio's macro strategy.
The model does have limitations. Despite being statistically significant, it has high variance, making the error margins too wide for precise price predictions.
Its best use is for trend forecasting – over extended periods, Bitcoin tends to follow the NASDAQ 100's direction.
This is why the NASDAQ's current position is so critical. After the recent risk-off event, Bitcoin has partially recovered, but the NASDAQ 100 remains just below its 200-day moving average. If the NASDAQ fails to climb back above this key technical level in the coming months, Bitcoin will likely face headwinds.
We're tracking this relationship closely as part of the Bitcoin Market Monitor.
Bitcoin's Double Challenge: Yield Curve Inverts as Fed Resists QE
We're witnessing something quite interesting. After briefly normalizing, the yield curve is now inverting again.
If you haven't followed the whole story, here's a quick recap:
In 2022, the Fed started Quantitative Tightening (QT) to fight inflation. QT typically hurts the US economy. The bond market sensed trouble, and the yield curve inverted.
This inversion lasted until earlier this year when a strong labor market, declining inflation, and the Fed's planned rate cuts finally normalized the curve.
Now we face monetary uncertainty, inflationary pressures from trade wars, and questions about US economic stability. These concerns are pushing the yield curve back into inversion.
The chart below shows this journey with three snapshots of the yield curve: six months ago (inverted), three months ago (normalized), and today (re-inverting).
An inverted yield curve has long been considered a warning sign of recession. It reflects the bond market's concerns about near-term economic conditions. When the curve inverts, investors expect at least an economic slowdown, if not a full recession.
In recent years, many have viewed this scenario as potentially beneficial for Bitcoin.
The theory goes: Even if Bitcoin suffers short-term pain during a recession, the following Quantitative Easing (QE) would more than compensate because Bitcoin serves as a powerful hedge against currency debasement.
This time could be different, though. The Fed appears determined to avoid returning to QE because of inflation concerns. And while economic growth might slow, a full recession seems less likely given the current strength of the labor market.
This puts Bitcoin in a potentially difficult position if macro uncertainty continues:
It may suffer from ongoing pressure on risk assets
It may not benefit from QE stimulus because the Fed wants to avoid fueling inflation
This situation requires close monitoring. At least for the next few months, the Federal Reserve is unlikely to provide much help.
That's it for today. Thanks for reading.
Cheers,
Nick
P.S. Every week, our team conducts extensive research analyzing market data, tracking emerging trends, and creating professional-grade charts and analysis.
Our mission: Deliver actionable macro and Bitcoin insights that help institutional investors and financial advisors make better-informed decisions.
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