25th May 2025 > > It's all about BTC.

tl;dr

BTC is poised to grow as its own asset class. Bitwise, though admittedly far from being impartial, provides some forecasts and commentary that perhaps we all need to think about in more depth.

Market Snap

Market Wrap

A very quiet weekend, though I note that El Salvador has given the two fingers to the IMF and re-started its BTC buying program (using IMF money to boot), which is a slap in the face for the anti-libertarians.

Curious Cryptos’ Commentary – Just sayin’ is all

Curious Cryptos’ Commentary – And whilst we are on that topic

Bitwise is not an impartial observer of the crypto markets, but that doesn’t mean its commentary and views should be simply discarded:

https://prowly-prod.s3.eu-west-1.amazonaws.com/uploads/mailing_attachments/80962/167b46599bd0254b1ae2dfe4ad2af0a9.pdf

This is the important bit:

Or in words, if you prefer:

“We expect ~$120 billion of institutional funds to flow into Bitcoin by the end of 2025 and ~$300 billion in 2026, totalling over 4,200,000 BTC acquired by a heterogeneous group of investors, including public Bitcoin Treasury Companies, sovereign wealth funds, ETFs, and nation-states.”

…

There is some stirring stuff in this report:

“2025 will see major adoption of Bitcoin by institutions as it transitions from a speculative asset to a strategic imperative. For investors from retail to sovereign wealth funds, Bitcoin is no longer an asset that can be ignored. As adoption accelerates, being underexposed to Bitcoin could become a growing risk in a portfolio allocation strategy.”

Tell that to Vanguard’s clients, who are being denied this potentially life-changing opportunity. I spy a court case coming on.

There is a whole section on BTCfi, a topic which does not get much press, not even in the CCC. I remain conflicted. I have no hesitation in staking ETH, SOL, and other coins in battle-tested protocols with a vastly diminished risk of contract failure or malfeasance. I am happy to borrow stablecoins within a DeFi platform with a massively distant liquidation price, to reinvest and so add the smallest amount of leverage to my portfolio (despite my constant advice otherwise). But a large part of my feeling comfortable about these small forays into DeFi is that even in a very worst-case scenario – given the spread across coins and across protocols – any surprise losses would only ever account for a few percentage points of my crypto portfolio at most. On the other hand, losing my BTC stash would be more upsetting than almost any other personal situation I can think of.

As this insightful document makes clear, there is a strong case to be made for BTCfi:

“BTCfi is poised to overcome these obstacles through innovation and its unique positioning in the institutional arena.

— Non-custodial solutions and robust auditing practices can mitigate smart-contract risks, building trust among users.

— Regulatory clarity, potentially more favorable for Bitcoin due to its commodity status, could attract institutions seeking compliance-friendly yield opportunities.

— Advances in Bitcoin Layer 2s, such as Lightning Network and rollups, are enhancing scalability, reducing costs, and improving transaction speeds. Moreover, BTCfi’s alignment with Bitcoin’s $2+ trillion market cap and growing institutional adoption positions it to capture significant market share, outpacing competitors.

By addressing these challenges, BTCfi can solidify its role as a dominant force in DeFi, delivering sustainable yield opportunities.”

I need to think more on this topic and the potential opportunities and risks it presents.