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July 21, 2025

The Bitcoin Endgame

Could Bitcoin one day become the dominant form of money in the world? Or at least be on par with major fiat currencies like the U.S. dollar, the Euro and the Japanese Yen?

This is the dream of Bitcoiners everywhere. They call it hyper-bitcoinization.

Recent developments make this scenario look less like a dream and more like a plausible long-term outcome.

Legislation that is critically important to the crypto industry is rapidly making its way through Congress.

On Friday, July 18, President Trump signed the GENIUS Act into law, which established a federal-state framework for stablecoins. This legislation is likely to significantly expand the use of crypto-based payment systems.

Meanwhile, the Clarity Act passed the House of Representatives with overwhelming bipartisan support and is now before the Senate, where it is also expected to pass.

This bill establishes a clear regulatory framework for digital assets, paving the way for accelerated adoption across mainstream financial institutions.

If Bitcoin does eventually join the ranks of the largest global monetary assets, given that its supply is fixed, this implies massive additional upside for the cryptocurrency.

We are not merely talking about doubling or tripling. This hypothetical scenario could involve staggering gains from current levels… fifty-fold, hundred-fold, or more.

Bitcoin’s continued rise to prominence is far from guaranteed. Things can always go wrong. But they can also go right.

We are well past the point of thinking of Bitcoin as an interesting novelty. Investors of all stripes need to think through how Bitcoin actually could succeed in the emerging battle over the future of money.

If hyper-bitcoinization is indeed the endgame, it’s still early.

Investors can still establish meaningful exposure to this scenario with a relatively small allocation to Bitcoin as a percentage of their overall portfolio.

We share our latest thinking on Bitcoin allocation strategies with subscribers at the end of this note.

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Why Bitcoin is surging

Bitcoin is reaching new heights and recently surpassed $120,000 per coin. Bitcoin has advanced more than 25% since the start of the year and more than 50% from its lowest levels in April.

It is now up nearly 100% since we initially recommended an allocation last September, partly in anticipation of the Presidential election.  

In addition to recent legislative progress, several other factors appear to be helping to spur demand for Bitcoin at the moment.

With the April tariff sell-off fading from view and the S&P 500 and NASDAQ also setting new all-time highs, it is now a more favorable environment for risk-taking.

AI stocks like NVIDIA (NVDA) are performing quite well. There is momentum and optimism in the tech sector, which historically correlates with Bitcoin and crypto.

The outlook for interest rates and monetary policy has also improved.

President Donald Trump has been calling upon Fed Chair Jerome Powell to implement large rate cuts and has even raised the possibility of firing him (Trump Toys with Firing Powell).

Trump wants to stimulate the economy and also help reduce the deficit by lowering the interest expense on government bonds.

Whether or not Powell sticks around until his term ends in May 2026, Trump appears intent on appointing a new Fed chair who agrees with his perspective on the U.S. economy.

This would be someone who believes the U.S. economy requires lower interest rates or at least can tolerate them without sparking inflation.

If and when this happens, Fed policy may become more accommodative, and there should be more liquidity in the financial system. Bitcoin investors are potentially anticipating this development.

Long-term drivers

Against this backdrop of favorable market conditions, structural factors that have propelled Bitcoin since its inception continue to operate.

Support for Bitcoin from the Trump administration has not been empty rhetoric. As Congress moves forward, the executive branch continues to take important incremental steps to bring Bitcoin into the mainstream economy.

One example is the recent announcement by William Pulte, the outspoken head of the U.S. Federal Housing Finance Agency.

He has ordered Fannie Mae and Freddie Mac to implement the use of Bitcoin and other established cryptocurrencies as collateral for purposes of qualifying for a mortgage

This is significant because Fannie and Freddie purchase about 50% to 70% of all mortgages and set the standards for mortgage lending in the U.S.

After significant studying, and in keeping with President Trump’s vision to make the United States the crypto capital of the world, today I ordered the Great Fannie Mae and Freddie Mac to prepare their businesses to count cryptocurrency as an asset for a mortgage. - William J. Pulte, Director, U.S. Federal Housing Finance Agency (6/25/2025)

Every day, Bitcoin observers see new legislative and regulatory developments that are favorable, while adoption by mainstream financial services advances.

TradFi is waking up

Once skeptical TradFi or “traditional finance” players are waking up to the opportunity presented by Bitcoin… as well as the risk of ignoring it.

What if Bitcoin isn’t just some speculative asset or silly Internet scam?

And if it’s really going to work, what happens to me personally if I don’t own any at all?

Bitcoin is appreciating because new money is pouring into the network. More and more individuals, corporations, institutions and governments want exposure.

Billions of dollars have flowed into Bitcoin ETFs so far in July, including two consecutive days when flows exceeded $1 billion for the first time ever.

Blackrock generates more revenue now from its leading iShares Bitcoin Trust ETF (IBIT) than it does through its massive iShares Core S&P 500 ETF (IVV).

IBIT is the largest Bitcoin fund in the industry with some $80 billion under management. IVV has more than $600 billion in client assets, but fees are substantially lower.

Many people, of course, are still on the sidelines. Bitcoin is radically different from other investments, and its core value proposition is somewhat abstract and complicated.

Many investors continue to believe it has “no intrinsic value” and refuse to get involved.

We have recently had some interesting discussions on the topic with our peers in the financial community—institutional fund managers and top investment bankers.

A number of them have gotten involved in Bitcoin, personally and/or professionally, but many have not and continue to have a dismissive attitude.

But many investors, from individuals to institutions, are clearly getting onboard.

There is one paramount question on the mind of everyone who has crossed the mental Rubicon and sees Bitcoin as a viable, if not very attractive, long-term asset…

How much should I own?

Bitcoin’s extreme success since its creation some sixteen years ago is undeniable and represents a selling point. At the same time, there remains a lot of uncertainty surrounding Bitcoin, including its highly volatile history.

A rational person is naturally going to be cautious about investing too heavily in Bitcoin. Yet the rapid price appreciation is telling us that many investors feel they are underexposed and need to own more.

Sizing up the competition

The total value of all Bitcoin in the world is only about $2.4 trillion.

Granted, that is an enormous number… but not if Bitcoin truly jumps into the big leagues in terms of financial assets….

In the remainder of The Bitcoin Endgame, we explain:

(1) how Bitcoin currently compares to other major monetary assets;

(2) parallels in the history of technology and the impact of network effects;

(3) why AI could supercharge Bitcoin adoption;

(4) Bitcoin allocation considerations and sensible strategies for individual investors.

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