In July, investors expect fireworks from Washington to Wall Street, and this year, Bitcoin (BTC -0.24%) looks determined to light the sky itself. A handful of powerful forces and an often-jittery macroeconomic backdrop are suddenly all starting to push in the same direction.
The convergence could juice prices in July, yet the bigger payoff is what those forces say about Bitcoin's next decade. Let's dive in and explore how the near term connects to the bigger picture here.
Why July's tailwinds line up so neatly
Imagine a giant vacuum cleaner running on autopilot. That is essentially how spot Bitcoin exchange-traded funds (ETFs) work.
Whenever investors hand cash to asset issuers, the funds must buy the coins and warehouse them, with no selling. In the opening week of July, that vacuum pulled in $217 million on July 7 alone, capping a three-day haul of about $1 billion and lifting cumulative net inflows to Bitcoin ETFs above $50 billion.
Many investors missed the headlines, yet the buying keeps grinding onward because asset managers are obligated to do it to back their ETFs. Mechanical demand is meeting a constrained supply, which is a bullish recipe whenever the float available for public trading is limited or thin.
Corporate treasurers are now acting nearly as mechanically when it comes to accumulating Bitcoin.
Image source: Getty Images.
In particular, the company Metaplanet added 2,205 coins to its holdings on July 7, lifting its stash to 15,555 and publicly targeting an allocation of 210,000 coins, or roughly 1% of all the coins that will ever exist, by 2027.
Even if this plan is incredibly ambitious and might not become a reality, it indicates that at least some buyers with deep pockets are eager to grab as much of the coin as they can manage, even if it means borrowing money to do so. And with each purchase, more coins leave circulation.
Policymakers are, surprisingly, helping this process along. A March 6 executive order mandated the creation of an as-yet unimplemented U.S. Strategic Bitcoin Reserve, instructing federal agencies to retain rather than sell any coins forfeited in the future.
Implementation rules were supposed to be drafted within 70 days of the order, so the final guidelines could land by late July. If the government follows through and becomes a net holder instead of a seller, the supply pressure facing Bitcoin tightens even further, and perhaps permanently.
Combine that with bullish development with the difficult-to-predict macro backdrop this summer. Capital is already rotating toward private sector stores of value rather than sovereign debt as tariff threats and currency angst resurface.
Demand for safe assets rarely arrives in tidy monthly bundles, but July's news flow could be the spark that lights the fuse -- though it's important to recognize that Bitcoin's status as a safe investment is still not proven.
Nonetheless, taken together, these forces create an unusually clear narrative for Bitcoin. Forced buying, diminished float, policy support, and risk hedging are all converging.
So July may not deliver a straight-line rally, but the chances of fireworks are better than usual.
The long game is doing the heavy lifting
Even if July pops, the real engine for this asset is time. After April 2024's halving, miners created just 450 new bitcoins per day, or about $48 million of supply at recent prices. At the current $1 billion-per-week ETF inflow, the funds could swallow an entire year of issuance in roughly five weeks. The asset is thus quite scarce already.
Corporate holders add another layer. Strategy, the original Bitcoin treasury business, has not sold a single coin since it began buying in 2020 and continues to buy them on a weekly basis.
None of this guarantees a painless ride in either July or the long term, of course. A global liquidity crunch could suck the wind out of the coin's sails. Or Congress might balk at the details of the Treasury's reserve plan, injecting uncertainty and probably denting prices.
Mitigating against those risks and running the practical playbook is simple. Dollar-cost average, keep some dry powder for true panics or deep dips, and measure your investment's success over multiple halvings, not multiple weeks.
If July fireworks appear, enjoy the show. If they fizzle, treat the cheaper coins as a gift.
