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June 3, 2025

Can Bitcoin Be Stopped?

Bitcoin has passed another test. After declining sharply when markets melted down in early April, Bitcoin has once again bounced back, stronger than ever.

For all the Bitcoin skeptics out there, the past two months stand as evidence…

Bitcoin is not only RESILIENT. It is ANTIFRAGILE.

The nuance that differentiates these two adjectives is important.

A resilient asset is one that survives periods of stress. A skyscraper that is still standing after an earthquake is resilient.

An antifragile asset emerges from periods of stress in even better condition. Think of a teenager who has been hitting the gym all summer.

Another all-time high

On May 22, Bitcoin set a new all-time high, just short of $112,000. It has since been trading in the $105,000 to $110,000 range, which represents a total return so far for the year above 10%.

Bitcoin has of course delivered astronomical returns since it was created. Looking at Bitcoin over the past five years, it is now up more than 500% from its lowest levels in 2022 and close to 100% from its highest levels in 2021.

Bitcoin (Last 5 Years)

Bitcoin is highly volatile—but even the skeptics must concede—it has a distinct tendency to spring back to life no matter what happens to it.

Whatever does not kill Bitcoin seems to make it stronger.

One possible explanation for this is that the adverse macroeconomic or market conditions that initially bring Bitcoin down ultimately make Bitcoin look more appealing.

The recent tariff debacle is a good example.

The price of Bitcoin fell nearly 30% from the January peak to the April trough (versus a nearly 20% peak to trough decline in the S&P 500 Index during the same general time frame).

Tariff risk temporarily drained liquidity from markets, which negatively affected the price of Bitcoin. Investors soon came to the realization, however, that Bitcoin is not necessarily a bad asset to have in a trade war context.

Bitcoin’s recovery in April and May was partly driven by the broader recovery in stocks and risk assets. But it was also the recognition that tariffs could in various ways lead to looser monetary policy and even quantitative easing, which is music to any Bitcoin investor’s ears.

The more fiat money central banks print, the more compelling Bitcoin becomes as a supply-constrained alternative form of financial capital.

Early-stage gold

Bitcoin is often described as “digital gold,” which is a good way to think about it. Bitcoin does not, however, always (or at least immediately) behave like gold, which tends to perform well in “risk off” scenarios.

Bitcoin critics often point to Bitcoin’s “beta” to the stock market—meaning its tendency to move up and down in sympathy with stocks—as evidence that it is not a bona fide uncorrelated store of value asset like gold.

We would counter that Bitcoin is better understood as an emerging store of value asset. From a long-term Bitcoin holder’s standpoint, this is actually a much more attractive designation.

If Bitcoin already behaved totally like gold, and for example tended to go up or stay flat whenever stocks went down, it would probably not have all that much growth left.

At some point, in the perhaps fairly distant future, Bitcoin may in fact behave like gold.

But the reason most investors are interested in Bitcoin is that they perceive it to have many years (if not decades) ahead of it as a high growth asset. If Bitcoin did not also decline when other high growth assets declined, this would suggest that it is not a high growth asset.

Bitcoin’s volatility and correlation to tech stocks in particular signal that it remains a high growth technology play with room to run.

Bitcoin’s market cap, just over $2 trillion, is still just about one-tenth the total market cap of all above-ground gold.

The new landscape

Macroeconomic shocks have a tendency to attract more capital to Bitcoin, even if it trades poorly in the short-run. But Bitcoin benefits from good news, too.

Bitcoin is now experiencing an adoption wave that is being driven by a much more favorable political and regulatory environment. Bitcoin is rapidly being elevated into the ranks of genuine institutional assets.

At Bitcoin 2025 last week, the big Bitcoin conference, the world heard from a wide range of speakers, including key players within the Trump administration. Among them was the President’s son, Eric Trump, who has personally become deeply involved in crypto and Bitcoin investing.

I’m telling you right now—everybody in the world wants Bitcoin. I don’t care where you are. I don’t care if you’re royal families. I don’t care if you’re the biggest financial institutions. Everybody wants Bitcoin. Everybody is buying Bitcoin…. Every single day, it’s another sovereign wealth fund…. Every single day, people are allocating billions and billions of dollars to it. - Eric Trump (5/28/2025)

Bitcoin is transitioning from a can’t-own to a must-own asset for all kinds of investors around the world.

Even JPMorgan Chase (JPM), whose CEO Jamie Dimon has been deeply skeptical of Bitcoin and once described it as a “pet rock,” recently announced that it will permit Bitcoin purchases in client accounts.

JPM does not intend to provide custody for Bitcoin, but many other banks and brokerage firms are working on that, including Bank of America (BAC), Citigroup (C) and Charles Schwab (SCHW).

An important regulatory development occurred on March 7, 2025 when the Office of the Comptroller of the Currency (OCC) issued an interpretive letter confirming that national banks and federal savings associations may provide cryptocurrency custody activities.

This determination is one of many changes across regulatory agencies since Trump took office that advance the integration of Bitcoin within mainstream financial services.

Expanding options

U.S. investors are currently able to get exposure to Bitcoin through crypto exchanges, such as Coinbase (COIN), which recently entered the S&P 500 Index, and Kraken.

Alternatively, they can invest indirectly in Bitcoin by buying Bitcoin Exchange Traded Funds (ETFs) that were approved for launch in early 2024. Some of the major ones include iShares Bitcoin Trust (IBIT), Grayscale Bitcoin Mini Trust (BTC), and Fidelity Wise Origin Bitcoin Fund (FBTC).

Investors can also purchase publicly traded companies, such as Bitcoin Treasury Companies, that provide various forms of indirect exposure to Bitcoin. We recently discussed these companies in Part I and Part II of Rise of the Bitcoin Treasury Company.

Within the next twelve months, we may see many major U.S. financial institutions, including banks, offer their clients the ability to purchase Bitcoin directly and hold it within their accounts.

As with any new initiative, it would not be surprising to see these trusted institutions start to market these new services fairly aggressively. This will only further normalize Bitcoin as an acceptable, if not essential, investment and stimulate more demand.

Retirement plans are next

On May 28, 2025, the Department of Labor rescinded Biden-era guidance from March 2022 that directed 401(k) plan administrators to exercise "extreme care before they consider adding a cryptocurrency option to a 401(k) plan's investment menu for plan participants."

Self-directed Individual Retirement Accounts (IRAs) already permit individuals to purchase Bitcoin and other crypto assets within their accounts. IRAs currently represent approximately $17 trillion in assets.

Now, individuals who have retirement assets in 401(k) plans will have potential access to crypto investments. This was previously discouraged by the federal government, effectively preventing workers from investing in digital assets like Bitcoin through these accounts.

401(k) plans represent an enormous and continuously growing pool of savings, with assets under management totaling around $9 trillion at this time.

Today's release restores the Department's historical approach by neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan's investment menu is appropriate. - Department of Labor (5/28/2025)

401(k) plan administrators will likely proceed with caution when it comes to crypto. But they now have a greenlight to include Bitcoin-related investments, normalizing Bitcoin adoption in one of the most historically risk-sensitive investment channels.

Other types of pension plans are embracing Bitcoin as well.

Several states have already adopted or are debating the inclusion of Bitcoin-related investments, typically ETFs, in their public pension systems. Many of the proposed bills authorize cryptocurrency allocations up to 5% to 10% of funds under management.

Strategic reserves

Meanwhile, states are also leading the way when it comes to the formation of Bitcoin Strategic Reserves. These are authorizations for direct purchases of Bitcoin by government entities.

Trish’s home state of New Hampshire, of Live Free or Die fame, was perhaps unsurprisingly the first to move.

In early May, Governor Kelly Ayotte signed a bill that allows the state treasurer to invest up to 5 percent of state funds into precious metals and digital assets that have a market cap of more than $500 billion.

In Texas, which is the top state in the U.S. for Bitcoin mining, both chambers of the legislature have approved a bill relating to the “establishment and administration of the Texas Strategic Bitcoin Reserve for the purpose of investing in cryptocurrency.”

Governor Greg Abbott indicated he looks forwarding to reviewing the bill and is widely expected to sign it.

At the federal level, President Trump’s Executive Order in March established a Bitcoin Strategic Reserve that would be initially capitalized with confiscated Bitcoin that is now owned by the federal government.

Th EO further directs the Secretaries of Treasury and Commerce to develop budget-neutral strategies to enlarge the reserve.

Speaking at Bitcoin 2025, Sen. Cynthia Lummis of Wyoming, who is among the leading advocates of Bitcoin in Congress, called for the U.S. to purchase at the federal level “at least 5%” of the total Bitcoin supply.

This would be around $100 billion worth of Bitcoin and roughly equates to the percentage of the gold supply already owned by the U.S. government.

Political agendas

One of the reasons politicians are lining up behind Bitcoin is simply that it is smart politics. Precise numbers are hard to come by, but it has been estimated that about 40% of all Bitcoin is owned by American citizens.

Between Bitcoin and other Bitcoin-related investments, American voters could have more than a trillion dollars of exposure to the asset class.

Bitcoin owners tend to be passionate about their investment. Sometimes, they are single issue voters. Many people believe Trump’s support for Bitcoin carried him over the finish line in 2024.

People who do not own any Bitcoin tend to be relatively indifferent when it comes to a politician’s views on Bitcoin. So from the perspective of someone courting voters, there is really only upside to being pro-Bitcoin.

One should not ignore as well the need for fundraising. The more valuable Bitcoin becomes, the larger the pool of money available that can be donated to pro-Bitcoin politicians and Bitcoin advocacy groups.

The ideology of Bitcoin

For many politicians, especially those with a libertarian streak, there is a deeper reason to support Bitcoin.

As anyone who has spent time listening to Bitcoin advocates understands, Bitcoiners see this form of money as a system of economic freedom.

A key feature of Bitcoin is that it is decentralized.

Bitcoin is not controlled by any government. Even though regulated institutions are now playing a much larger role within the Bitcoin ecosystem, it is not fundamentally reliant on government-controlled financial institutions for it to operate.

Bitcoin is a commodity, like gold, and not government-controlled money.

Another key feature is that it has very clear and immutable supply constraints. There will only be 21 million Bitcoins ever mined (of which some 19.6 million have already been mined). The remaining 6% or so will not be fully mined until 2140.

So, unlike fiat money, which can be printed endlessly and into oblivion, Bitcoin is protected by scarcity. In fiat money systems, a government can essentially take your money by diluting its value and printing more for itself.

Bitcoin cannot be diluted by the central bank’s printing press. This is precisely what so many people in politics love about it.

In our administration, we understand the full potential of the digital assets industry. Not just as an investment. Not just as a flashy technology. But as a symbol and driver of personal liberty for all our citizens. And we are dedicated to seeing that promise fulfilled. - JD Vance (5/28/2025)

The idea that money needs to be separated from political power in order to preserve freedom is nothing new. This has been a driving force behind political support for gold throughout American history.

We recently came across an interesting article penned by none other than Howard Buffett, the father of famed investor Warren Buffett. The elder Buffett happened to be a Congressman from Nebraska who served four terms in the 1940s and 1950s.

Unlike his son, who throughout his investment career has made disparaging remarks about gold as an unproductive asset that has no real utility, Howard Buffett appreciated the political importance of gold and its role in preserving economic liberty.

Writing in 1948, Rep. Buffett noted that a person living within the totalitarian regimes of his era had no real freedom “by the mere fact that his money could be called in and depreciated at the whim of his rulers.”

Before Satoshi Nakamoto dropped Bitcoin on the world in 2009, gold was the primary mechanism by which human beings, seeking economic sovereignty, detached money from political power.

Today, we have a digital asset called Bitcoin that, like gold, can be transferred between two human beings without the direct involvement of any government entity.

Like gold, which can only be slowly mined at great cost, the quantity of Bitcoin cannot be manipulated by governments or any other actor.

Whereas gold has functioned as money for thousands of years, Bitcoin has been in existence for less than two decades. Bitcoin’s standing in the world is far from assured… but its relative immaturity as a financial asset also means it may still have vast upside.

Time and tide wait for no man. - English proverb

Many investors are uncomfortable with or even skeptical of Bitcoin. This is completely understandable.

But with Bitcoin adoption seemingly accelerating, there is no time like the present to improve one’s familiarity with Bitcoin as a potential investment.

Perhaps more importantly, there is no time like the present to develop an allocation strategy—a subject we intend to address in detail in the near future.

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