Bitcoin’s Perfect Storm: Record Highs and Institutional Demand

Mm.

Bitcoin rallying to new record highs this week, clearing 124,000.

Prices came back from the stratosphere, and we are looking at the crypto major hovering right above 118,600 in New York morning trade, while the rally fueled by growing Fed rate cut expectations as well as strong institutional demand.

Now crypto ETFs in the US have seen strong inflows this year boosted by a pro crypto regulatory environment under Trump.

Now the Genius Act establishing strict rules for stable coins requiring.

Full reserve backing and consumer protections.

The Clarity Act passed by the House also aims to clarify crypto regulation and support ETFs, and Trump issuing an executive order to open 401k plans to include alternative assets, including crypto.

Well joining me on this Friday morning is John Harr, managing director at Swa Bitcoin.

John, great to have you here.

Thanks for joining me.

Thanks, Jeremy.

Always good to be here.

Well, let's talk about Bitcoin clearing the record highs earlier this week and what you call the perfect storm.

Break this down for us.

Yeah, for sure.

So record highs just a couple of days ago, you know, as you said, now we're around 118, 119, so there was a pretty quick pull back from the record highs, but that's something that Bitcoin tends to do, and I would say that the thesis is intact, perfect storm thesis, you know, whatever you want to call it, but basically it is a dollar debasement would be another way to refer to it.

The Bitcoin going up in dollar terms is another way of saying that the dollar's purchasing power is falling over time.

That is a result of dollar expansion, whether that comes from the central bank, whether that comes from government deficit spending, whether that comes from commercial banks issuing more dollars.

I would say those three things, well, first, just objectively, those three things have been happening and expanding the money supply for decades now, and I think it's a really tough argument to make to say that those trends are going to stop anytime soon.

This year in particular was interesting because when Trump got inaugurated, everyone saw Elon and Doge and all these efforts, and there was a brief moment in time where people said, oh, they might balance the budget, we might not deficit spend anymore.

And then I think very quickly people including Elon realized this is just not going to happen.

The things that the government deficit spends or spends in general on Medicare, Medicaid, Social Security, now interest on the debt and military spending.

You can't be a popular candidate in America in politics and run on cutting those programs substantially.

So I think what we're seeing is that it is really hard to cut deficit spending.

The Fed steps in and you know buys assets when they need to, and this all leads to dollar expansion and it all just highlights the value proposition of Bitcoin and you've hit on some key points there we know here on.

Wall Street, we can't separate what happens in the nation's capital, whether we're talking about public policy or monetary policy.

So the White House, the Federal Reserve all located in Washington DC.

But in terms of what all of this means for the crypto major of Bitcoin, break this down for us and also tell us about institutional demand and DATs or crypto treasury companies.

For sure that that is one of the biggest trends right now for Bitcoin and some of the other crypto tokens as well.

So yeah, when you look at what's going on in how the administration or politicians at large affect Bitcoin.

I think you have to acknowledge that there was a huge shift in November of last year, getting an administration that is much more positive on Bitcoin than anything we've seen in the past.

Even, you know, same person in the White House, you compare Trump statements and Trump 1.0 talking about Bitcoin versus Trump 2.0, they're just night and day, totally different.

There's a crypto czar, excuse me, in the White House now, David Sachs, over and over they have said.

They're going to find budget neutral ways to accumulate Bitcoin even if they don't do that soon.

I think the market of institutional investors have seen this change of Bitcoin being just accepted by the White House, by the government at large and with that kind Of acknowledgment and acceptance, I think institutional investors, whether it's corporations doing the digital asset treasury plays, or if it's pensions endowments, that's another big headline.

Harvard just now owns over $100 million of one of the Bitcoin ETFs.

I think you have to attribute that to them seeing that Bitcoin is a much more accepted asset at this point in time.

And one other interesting point there is that if you look at Bitcoin's volatility since the ETFs launched, that was January 2024, it has just come down over time.

So if you look, I think it's the 60 day rolling volatility for Bitcoin.

It used to be 3 times that of gold.

Now it's less than 2 times that of gold, and I think that's just a signal of again the acceptance of Bitcoin and the growing institutional allocation to the asset class.

Yeah, and John, if we take a step back and look at what's happened here at the New York.

Exchange this year in terms of IPO we had Circle going public and just earlier this week we had Bullish go public here at the New York Stock Exchange.

So for viewers out there, everyday Americans who have yet to dip their toes into crypto or maybe have access, say through funds, what is your take on the future of crypto investments?

So at Swan Bitcoin, I, you know, have to be blunt here.

We are a Bitcoin only company.

That is our view.

Others are obviously entitled to their view, but we just think Bitcoin stands apart as a fixed supply digital peer to peer, no issuer monetary asset.

And why is that?

Yeah, so you know, just look at the nature of Bitcoin, how it's designed, we would say that it does that you can't credibly call the other assets. all those things I just listed, they might have their thesis, you know, a lot of them rest on like this utility thesis, for example, right now a big narrative in the ET community is that ETF is going to be valuable.

Well, one, because there are treasury companies popping up, but kind of the value accrual thesis from them is that ET is going to be used as the blockchain of choice for stable coins, and that usage is going to drive the price of Eth higher.

I think it remains to be seen.

It's kind of tricky to know what stablecoins are going to exist in the future and which blockchain they're going to use.

I think the Bitcoin thesis is just a lot simpler and OK, John, we won't have to leave it there, but thank you so much for joining us again.

Thank you.