A right translated cycle
Bitcoin has essentially spent six months consolidating near the important psychological $100K level, consuming supply and is now advancing forward under a liquidity positive environment that leads us to believe we have just begun a new major trend for this cycle that could carry Bitcoin to $150-200K over the next 6-12 months.
We are currently in the camp that the 2025 Bitcoin cycle is a “right translated cycle”. If correct, this means the bulk of this cycle’s returns and growth may occur later in the cycle and/or the cycle could extend beyond 2025.
There are four (4) key reasons we believe this to be the case today:
(1) A bigger market moves slower
The Crypto market cap is hovering at $4T today. It takes exponentially more capital to move the market up, which is why we have seen diminishing returns and diminishing volatility for Bitcoin every cycle. At today’s point in the Bitcoin cycle (middle year 4) we had seen significantly more appreciation across Bitcoin and altcoins in prior cycles (see middle 2021, 2017, etc). At this point in prior cycles we had already surpassed several multiples of the prior cycles all time high (ATH). We are not expecting the same level of multiple expansion, but compared to prior Bitcoin cycles, this one has barely started.
Bitcoin’s appreciation from the prior cycle ATH stands at 70% today, a very subdued total return compared to prior cycles.
(2) Increasingly pro-Bitcoin policy and regulatory rigor have developed very late in this cycle
With the inauguration of Trump, we transitioned from an anti-Bitcoin to a pro-Bitcoin US regime. Under the prior administration US banking rails into crypto businesses and funds were effectively shuttered under Operation Choke Point 2.0 in 2023 and 2024 (Capriole, among 1000s of other entities, was also debanked several times during this period for no reason, read more here). However, gradually over the last 2 years we have seen a dramatic and positive shift to a pro-Bitcoin and digital asset regime:
- The Bitcoin ETF launch was the most successful ETF launch in history, and provided the regulatory rigour and acceptance banks, institutional allocators and investors were looking for.
- The SEC began retreating from its anti-crypto policy and losing significant court cases against crypto entities (e.g. the XRP case).
- Anti-crypto SEC chair Gensler resigned and the SEC pivoted to broadly accept crypto.
- Trump executed his pro-crypto executive order and strategic reserve.
- The White House officially ended Choke Point 2.0, and re-opened US banking into crypto.
The above developments are major and cannot be overstated. Over the last 18 months we have effectively re-opened capital channels, provided regulatory and legal certainty for businesses and investors and opened the flood gates for capital into Bitcoin and Digital Assets. The majority of these events, and the intensity of their impact, occurred largely within just the last six to nine months.
The IBIT Bitcoin ETF “was the fastest ETF to get to $80B in just 374 days, about 5x faster than the previous record, held by $VOO, which did it in 1,814 days. [IBIT] is now the 21st biggest ETF overall.” (source)
(3) The Fed pivoted to easing
Markets came out of the strongest tightening regime in history in 2024, with Federal Reserve interest rate cuts starting only in August 2024. High rates generally make risk assets, including Bitcoin, less attractive on a risk adjusted basis. High rates also reduce capital flow activities overall as they reduce the net present value of investments. As interest rates trend down under the current easing environment, they improve the business case and attractiveness of digital assets.
The Federal Reserve began easing less than a year ago. The Federal Reserve’s latest provided forecast is for interest rates to hit around 3% in a couple years. (source)
(4) Liquidity just started to re-enter the market
In Update #64 we outlined several Capriole metrics which show increasing liquidity entering financial markets today. JP Morgan also recently noted that we are “in one of the most favorable macro environments, characterized by a depreciating dollar, narrowing credit spreads, subdued inflation, and interest rates remaining below 4.5%”.
Capriole would add to this that:
- Inflation (CPI) has largely trending down and is close to the Federal Reserve’s 2% target
- Interest rate cuts are coming (hastened by recent job losses) and
- Global money supply ($113T) is growing at its fastest rate per annum since 2020, up 9% in 2024.
In the last six months alone, 9 Trillion (with a “T”) United States Dollars have been added to the circulating global money supply. I wonder where a lot of that will go?
These are fairly optimal liquidity conditions for risk-on assets in July 2025.
Aggregate “Macro Conditions” by JP Morgan suggests we have entered strong easing financial conditions, optimal for risk assets and Bitcoin.
Central banks are flooding the market with fiat money. The yearly growth rate just hit 9% and $9T has been added to the global money supply in 2025 alone.
Market Summary
The above backdrop of increasing political support, established financial rails, regulatory guidance and support as well as the liquidity injection into capital markets that started only within the last year has established optimal conditions for hard assets. The last few months alone have seen the most fiat money pour into markets globally than we have seen in over 5 years. Not to mention Gold’s relative strength (discussed in Update 63 and Update 64) which also leans towards strong Bitcoin outperformance here.
It’s important to monitor macro and on-chain data systematically over time to assess how opportunities and risks evolve. Nothing is static. As with all our market assessments; our views here are fluid and will change as and when the data does.
Nonetheless, the above dynamics explain why conditions have improved drastically for Bitcoin in recent months in 2025 versus 12 and 24 months ago and why we may see a right translated Bitcoin cycle.
If returns are just a fraction of prior cycles, Bitcoin has not even entered the exponential phase yet.
The Bitcoin Treasury Company Flywheel
The new dollar rails, regulatory guidance and improved liquidity conditions above have been the perfect backdrop to enable the take off of Bitcoin Treasury Companies (TC), a phenomenon we have been discussing in recent updates and podcasts. Capital now has the confidence to flow into the sector and replicate the MicroStrategy (now “Strategy”) success story of the last 5 years. Today there are over 145 TCs globally which are buying bitcoin and draining supply off the market.
Bitcoin Treasury Companies purchases by quarter are growing exponentially, with a broad strategy to “only” buy.
This has resulted in a fascinating development. In July 2025 Bitcoin just achieved a new all time high in the percentage of the Bitcoin network owned by Long-term Holders (LTH). A whopping 74% of all Bitcoin now sits in wallets that have a statistical propensity to hold Bitcoin for the long-term.
This is not a characteristic you expect to see late in the Bitcoin cycle historically.
While Capriole’s base case coming into 2025 was that the late cycle risk would probably grow into H2 2025, for now the data is not at all suggestive of that. In fact, it’s quite the opposite.
Indeed, it’s more common for Bitcoin’s price to set a floor when LTH supply peaks like it is today, yet we are trading near $120K.
Further evidence using Bitcoin on-chain data that this is a right translated cycle and the best may be yet to come.
Bitcoin cycles usually top on falling Long-term Holder (LTH) supply. But it’s currently growing at break neck pace and LTH supply is at its highest level ever, exceeding the prior high set 10 years ago in 2015.
We have exponential growth in TCs, dozens are popping up each month. Now they can go to their investors and show incredible performance (relative to their pre-treasury strategy). So you can expect the capital raising flywheel to really take off from here as Bitcoin trends higher. Strong returns and inflated market caps make debt and equity issuance infinitely easier. A powerful flywheel to attract capital and expand.
For now the TCs are Bitcoin vacuum cleaners. A key datapoint impacting Bitcoin markets in 2025. I expect the Bitcoin held by TCs will overtake the ETFs within 6-12 months at current acquisition rates.
While TCs are a key demand driver for Bitcoin to the upside; they are also a growing risk to the downside.
How is Capriole managing the TC opportunity and risk?
Bitcoin Treasury Company Strategy
Since 2024, Capriole has had some exposure to Bitcoin Treasury Company (TC) equities. Our methodology here has expanded over time and we will have more to share on this front in the coming weeks as we release several tranches of new Bitcoin Treasury Company metrics on Capriole.com/Charts. In particular some important factors to monitor for TCs includes their Bitcoin acquisition rate, their mNAV (multiple of market capitalization to Bitcoin holdings) and Price Sensitivity to their Bitcoin acquisition rate. For Capriole, these companies can provide a levered way to access Bitcoin for short periods, when our proprietary Bitcoin models also lean bullish on Bitcoin.
As long as Bitcoin prices are rising and TCs are buying Bitcoin, it’s very bullish for TCs in the short- to mid-term. However, TC risks will grow, possibly in late 2025 and probably in 2026.
These companies are effectively using debt and multiple expansion to fund their acquisitions.
That works great when:
- Bitcoin is going up
- Debt levels are relatively low
- Their average Bitcoin purchase price is relatively low
- Their company is an early Bitcoin treasury strategy adopter and not drowned out in a sea of competition
- Their company is only buying Bitcoin (not selling)
Bitcoin is going up and debt is serviceable, so (A) and (B) look OK today. However, the average Bitcoin purchase price of many of these new entities is around the $100K mark (and climbing) and with 145 companies (many launched within the last few months), incrementally more companies are going to find their value prop has diminishing returns and their capacity to raise money may be reduced in a competitive sea of TCs.
At some point in this cycle, as always, Bitcoin returns will go down (A), some entities will move towards excessive leverage and risk as greed and over-confidence in search of greater returns takes over (B) in an attempt to continue to scale their TC operation amidst the growing competition (D). For a while this will be highly profitable. Others will copy excessive risk taking activities and risks will likely be downplayed.
But will all 100+ companies have Michael Saylor level multi-decade conviction to never sell? Unlikely.
Eventually, those that were late to the game and who have high purchase prices (C) will need to report to boards and shareholders to explain why they are deeply underwater. Some will very quickly vote to sell and abandon the Bitcoin strategy in favour of their original business. Perhaps it’s just a small Bitcoin sale to reduce risk, or to service a loan – ultimately the reasoning given won’t matter. Once some prominent entities start selling and Bitcoin is trending down, it will be like exiting a crowded room through a small doorway, where everyone in the room was gouging. There’s many analogies here. But as old as time there is greed and excessive risk taking near cycle tops.
We don’t want to overstate the risk yet and we don’t want to hypothesise on when the TC flywheel breaks down, but it certainly will at some point when enough of the above factors (A through E) invert. TCs are great for adoption today, but they do need to be risk managed. One of the greatest investors of all time said “When I see a bubble forming, I rush in to buy, adding fuel to the fire” (George Soros). So when in the early stages of a exponential growth cycle, it can make sense to capitalize on such a major movement which could expand for many months (or even years) into the future.
We’ve seen many times how this type of excessive risk taking can unfold near cycle peaks as a result of strong returns and greed. It’s happened many times in traditional markets over the last century (retail leverage trading in 1929, credit default swaps in 2007/8, etc). We also see it every year or two in crypto (ICOs in 2017, perpetual swap leverage trading and liquidations in 2018-2019, NFTs in 2021, the LUNA blowup in 2022, etc). People love a bubble, a new paradigm, a “supercycle” – a possibility for easy riches.
We are well away from this today, we are not bearish on Bitcoin and crypto. But risk management is always the most important factor for survival in this industry and survival allows for great long-term returns. That’s why considering these risks plays a very important role in how we think about markets, and build our models and systems at Capriole.
The TC risk will start to become apparent when we see measured amounts of TCs selling Bitcoin instead of buying it, which is why monitoring for TC Bitcoin sales is a key systematic strategy Capriole is tracking, amongst other data points here. We don’t expect anything negative soon, but this is a very important risk management tool for the coming months and years ahead which Capriole will be monitoring in real time and for which a simplified version will also soon be available at Capriole.com/Charts.
Capriole Charts
Your one stop shop for Bitcoin and Macro market analytics!
Two months ago we launched the Capriole Charts page, rebuilt in a professional TradingView interface. We are quite proud of the result and believe it represents the highest signal Bitcoin and Macro charting platform on the market today providing actionable insights.
Since inception in 2019, Capriole has prided itself on releasing open source content, strategies and analysis to support people in navigating this burgeoning industry. When we started there was very little analysis around how to value Bitcoin. Even today, we believe our metrics offer the most robust toolset for identifying the fair value of Bitcoin, and correspondingly when it is over- or under-valued. We first became known for these models when we released Hash Ribbons in 2019, and our suite of models has developed substantially since.
Capriole Charts is still in its early form and a lot will be coming to enhance it in the future.
Over the next weeks, expect to see several tranches of Bitcoin Treasury Company metrics released, which will hopefully provide some insightful information and an extra data point in your risk management process. We will then be adding a strategy section for Premium subscribers. Following that, we have some big exciting things in the pipeline… watch this space.
Capriole Charts currently has over 50 metrics (expect this to go up, a lot). But the Capriole Fund uses 100s more. For the metrics and models presented, note that there are many ways to interpret them, there are optimal ways to weight each signal, and indeed optimal weights for each model, and indeed for each model-of-models within a portfolio – which is the intelligence we conduct within the Capriole Fund portfolio.
Check out the Charts: Capriole Charts.
The Bottom Line
As long-time readers will know, Capriole has dedicated tremendous effort over the years to enhancing its capabilities in Bitcoin, digital asset and macro investment management through the development of unique fundamental based metrics, a deep understanding of markets and extensive ML and AI research and development (well before ChatGPT became popular). Not all research pathways we pursue work out, but our continued efforts in these areas have put us in a strong place to navigate global markets in 2025, especially at this important time where Bitcoin has begun its merge with traditional finance.
We believe many of the models circulating the Twittersphere today are outdated and no longer relevant in this paradigm shift. Onchain data is useful, but is gradually representing a diminishing share of the economic machine that explains Bitcoin. We hope that our recent updates and this letter will serve as some illustration for that.
Given the four key reasons discussed above, we would not be surprised to see a right translated Bitcoin cycle in 2025/6. This may carry Bitcoin to $150-200K within the next 6-12 months, based on the data we track today. If correct, many opportunities lie ahead.
As the industry matures so has our investment process and the depth of markets we analyse. Our model set has expanded, and so has our ability to link global markets and liquidity flows to explain opportunities and risks for Bitcoin, equities and commodities. We believe all of this puts Capriole in a good position to leverage the upcoming market opportunities and also prepares us for when the next Crypto winter hits. Hopefully that’s quite a while off.
Charles Edwards
