The Global Liquidity Pulse: Implications for Bitcoin in a Slowing US Economy

André Dragosch, PhD Director, Head of Research — Europe

Ayush Tripathi Research Analyst

Overview

Chart of the Month6 Performance7 Macro Environment11 On-Chain Developments19 Bottom Line25 Appendix26

Cryptoasset Market Overview26
Cryptoassets & Macroeconomy31
Cryptoassets & Multiasset Portfolios33
Cryptoasset Valuations39
On-Chain Fundamentals42

Performance: Bitcoin remained relatively resilient despite high economic policy uncertainty and heightened geopolitical risks in the Middle East. Bitcoin’s realized volatility remained below those of major equity indices such as the S&P 500. Despite transient consolidations and geopolitically driven drawdowns, the month’s data underscore two enduring drivers: (1) robust institutional demand - via ETPs and corporate treasuries - continuously drawing down supply, and (2) heightened macro-risk headwinds steering investors toward scarce, decentralized “portfolio insurance.” As trade-policy clarity and Fed easing loom, these tailwinds set a constructive backdrop for bitcoin heading into July.
Macro: Heightened Middle East tensions and growing US recession risks have increased market risk aversion, yet historical data indicate such geopolitical crises are often followed by significant bitcoin rallies. Meanwhile, sustained US dollar weakness, driven by capital repatriation, de-dollarization pressures, coupled with an outsized number of global rate cuts and re-steepening yield curves, is re-accelerating global liquidity and reinforcing a bullish macro tailwind for bitcoin. A continuation of the Fed’s cutting cycle in July would be another bullish wild card in this environment.
On-Chain: Corporate adoption remains the primary demand driver, with the number of public companies holding bitcoin nearly doubling to 134 in just six months and providing a stable, price-agnostic structural bid alongside institutional ETP inflows. All in all, our main bull thesis for bitcoin of a pervasive demand overhang / supply deficit remains very much intact. However, weak accumulation across wallet cohorts and slowing on-chain demand suggest continued short-term consolidation until broader buying activity resumes.

Chart of the Month

Performance

The performance in June was characterised by consolidation in the price of bitcoin due to an increase in geopolitical risks in the Middle East.

Over the past month, bitcoin and broader crypto markets traversed a familiar pattern of post-all-time-high consolidation, sentiment-driven swings, and ultimately renewed inflows, underpinned throughout by strong on-chain demand from institutions.

After touching fresh all-time highs, bitcoin spent the opening weeks of June in a digesting phase. With the year’s largest Bitcoin conference in Las Vegas concluding without any truly market-moving announcements, the absence of new catalysts - despite headlines like Pakistan’s plan for a Strategic Bitcoin Reserve and Paris Saint-Germain adding bitcoin to its treasury - drove a short-term “bull fatigue.” Meta’s shareholders voting down a similar treasury proposal only reinforced the pause.

Yet underlying on-chain fundamentals remained constructive: US spot-ETF inflows and corporate treasury purchases continued to drain exchange supply, while retail holders provided the bulk of sell-side liquidity.

As cross-asset risk appetite surged, cryptoassets outpaced traditional markets. Bitcoin reclaimed the $110k level, nearing its prior peak, while sentiment readings in both crypto and broader financial markets reached decisively bullish territory.

This optimism held even amid elevated US policy uncertainty - highlighted by the public spat between Elon Musk and former President Trump over fiscal policy and DOGE’s role - underscoring that market mood drove prices more than headlines. Credit-default swap spreads on US Treasuries, at roughly 50 bps over one year, remained elevated, yet models valuing bitcoin as sovereign-debt insurance pointed to a theoretical fair value near $230k, reflecting both rising sovereign risk premia and bitcoin’s growing scarcity.

Late in the month, escalating Middle East tensions - culminating in US military engagement and Iran’s parliamentary vote to close the Strait of Hormuz - triggered a classic flight-to-safety into gold and bonds.

Bitcoin and Ethereum underperformed equities briefly, though still outpaced many risky assets amid a weaker dollar. Historical analysis of the top 20 geopolitical shocks shows bitcoin averaging +31.2 % over 50 days post-event, suggesting these pullbacks often become buying opportunities.

Indeed, our sentiment index dipped into negative territory before rebounding, and stronger-than-expected Fed rate-cut expectations (priced in between 2-3 cuts by year-end) lent additional support via dollar depreciation. Ethereum ETP flows also accelerated, attracting $577 mn versus $1.04 bn into bitcoin ETPs.

Bitcoin remained remarkably resilient as its realized volatility remained below those of major US equity indices such as the S&P 500, NASDAQ 100 or the Magnificent 7 index as highlighted in one of our weekly reports.

Our macro thesis is that bitcoin and cryptoasset markets remain resilient on account of rising excess liquidity growth which tends to support the business cycle and above all asset price inflation.

In fact, although the Fed is still on hold, other major central banks around the globe have delivered the most rate cuts since 2008/09 which implies a continued acceleration in excess liquidity growth (Chart-of-the-month).

In this environment it is no surprise that institutional demand for bitcoin proved remarkably steady. Public companies (led by Strategy’s continued acquisitions) and US-listed spot-ETF vehicles consistently outbought weekly new issuance of bitcoins. Corporate treasury activity extended beyond the usual names: Japan’s Metaplanet added +5,550 BTC to reach 13,350 BTC, and Texas enacted Strategic Bitcoin Reserve legislation following Arizona and New Hampshire.

In the final week, macro uncertainty ebbed as prospects for major US trade agreements rose and the US-Iran dynamic moderated. Fed commentary increasingly flagged July rate cuts as contingent on easing tariff risks. Global bitcoin ETPs recorded $2.2 bn of net inflows over five consecutive weeks, taking year-to-date totals to $14.3 bn, while US spot ETFs logged a potential record streak of positive days. Our sentiment index climbed to its highest level since May, aligning with a broad return of risk appetite.

Despite transient consolidations and geopolitically driven drawdowns, the month’s data underscore two enduring drivers: (1) robust institutional demand - via ETFs and corporate treasuries -continuously drawing down supply, and (2) heightened macro-risk headwinds steering investors toward scarce, decentralized “portfolio insurance.” As trade-policy clarity and Fed easing loom, these tailwinds set a constructive backdrop for bitcoin and cryptoassets heading into July.

A closer look at our product performances reveals that cryptoasset markets generally remained relatively resilient despite high US economic policy uncertainty and elevated geopolitical risks in the Middle East. A weaker Dollar weighed on the performances in Euro-terms of the ETPs in June.

Performance dispersion among altcoins has remained relatively low as most altcoins remained highly correlated to the performance of bitcoin in June. Altcoin outperformance generally remained low in the month of June although it has recently started to increase a bit. However, Bitcoin’s market cap dominance continued to trend higher in June to 64.5%, up from 63.5% in May.

Bottom Line: Bitcoin remained relatively resilient despite high economic policy uncertainty and heightened geopolitical risks in the Middle East. Bitcoin’s realized volatility remained below those of major equity indices such as the S&P 500. Despite transient consolidations and geopolitically driven drawdowns, the month’s data underscore two enduring drivers: (1) robust institutional demand - via ETPs and corporate treasuries - continuously drawing down supply, and (2) heightened macro-risk headwinds steering investors toward scarce, decentralized “portfolio insurance.” As trade-policy clarity and Fed easing loom, these tailwinds set a constructive backdrop for bitcoin heading into July.

Macro Environment

The macro environment in June was characterized by heightened risk aversion due to the escalation of the conflict between Iran and Israel in the Middle East.

Although the outcome of this escalation still remains uncertain, a general rule-of-thumb is to use major geopolitical risk events as potential buying opportunities for bitcoin. One of the key reasons is related to the fact that major geopolitical risk events were historically followed by significant price bitcoin appreciations.

The table below complies the list of the top 20 major geopolitical risk events and bitcoin’s subsequent performance indexed to 100 at the time of the event:

Out of these 20 major geopolitical risk events, bitcoin was trading higher 13 times 50 days after the respective event. This implies a skewed probability distribution to the upside.

Ongoing uncertainty induced by these geopolitical events could tip the US economy into recession as the underlying growth momentum still remains relatively weak. As we have mentioned in previous reports already, the US housing market remains very weak and the latest data even imply a continued increase in housing inventories across the US which is starting to exert pressure on home prices. According to data from Zillow, 62% of US counties experienced declining home values in May 2025.

Construction activity tends to be key cyclical indicator to watch to assess the health of the overall economy as it tends to feed through other sectors such as manufacturing and ultimately to employment. Add to this the fact that import tariffs are increasing pressure on the outlook for imported goods from abroad as can be seen in the latest ISM manufacturing imports sub-component which has plummeted to the lowest level since Covid. Combined with the strong increase in ISM manufacturing inventories this paints a picture very weak domestic manufacturing activity over the coming months.

In fact, the latest regional Fed manufacturing surveys point towards a severe decline in capex intensions that have fallen to Covid lows as well. This tends to be a leading indicator for US manufacturing activity and still implies that recession risks still remain elevated.

Some alternative high-frequency indicators in the US are already pointing towards a decline in overall employment which would be a clear recession signal.

There is a case to be made that the US might already be in a “quietcession” – a quiet recession which is not reflected in official hard data, yet.

It is worth noting that official hard data tend to be published with a lag and are usually subject to significant revisions, especially employment data. This makes this hypothesis even more likely considering the weakness in a broad set of leading indicators from housing to manufacturing.

That being said, our macro factor model still impies that a recession might not be as bad for bitcoin as widely feared.

The US Dollar factor has been the major driver of bitcoin’s performance over the past 6 months, which is closely associated with global money supply growth as outlined in one of our previous monthly reports.

The recent weakness in the Dollar seems to be related to increased capital repatriation from foreigners, as demonstrated here. A key conversation among traditional investors is related to the fact that the One Big Beautiful Bill Act Section 899 disadvantages foreign investors investing in US assets.

This poses a risk to the Dollar as foreign investors are incentivised to repatriate parts of their capital from the US. It is no surprise that the Dollar continues to be under pressure and has just recently touched the lowest level since March 2022.

But what is even more conerning is the fact that the Dollar has been behaving increasingly like a risk-on currency, i.e. depreciating amid rising economic uncertainty which is highlighted here.

This implies that the US Dollar is gradually losing its safe-haven status.

We have outlined why an acceleration in De-Dollarization is potentially bullish for bitcoin in our monthly report in May 2025 as well.

The accelerating depreciation of the Dollar is even more interesting in light of ongoing easing efforts by other central banks worldwide. In fact, the G20 central banks have performed 54 rate cuts over the past 12 months – the highest amount of rate cuts since 2008/09.

While the Fed remains on hold since December 2024, other major central banks have continued to lower rates – the ECB has cut its key policy rate four times in 2025 already, and both the Bank of England and the Swiss National Bank two times. Although the Fed tends to lead other major central banks during rate cutting cycles, the Fed is now clearly lagging behind other central banks this time around.

Meanwhile, both inflation indicators and employment indicators in the US have actually become increasingly more supportive of further rate cuts. In fact, a standard Taylor rule implies that a Fed Funds Target Rate of close to 3.5% is warranted against a mid point target rate of 4.375%. It is hard to disprove the fact that both inflation and employment metrics have deteriorated even more in a standard Taylor rule since the Fed stopped cutting rates in December 2024.

This implies that the Fed continues to be “behind the curve” especially relative to its global central bank peers. It is no surprise that calls for Jerome Powell’s suspension within the current US administration are getting louder.

However, rates traders don’t believe in a significant change in course by the Fed anytime soon. At the time of writing this report, Fed Funds Futures still only price in 2-3 additional rate cuts until the end of 2025 which has been expected essentially since the beginning of the year. That being said, the “risks” are tilted to the downside as macro indicators continue to favour lower rates which is also supported by recent commentary by Powell himself.

Belated Fed rate cuts should also continue to drive the US Dollar lower, which would also fuel further global money supply expansion via a Dollar depreciations – a key tailwind for bitcoin. Global money supply is already at new all-time highs and continues to accelerate.

In the context of global liquidity, it is important to highlight that these preceding rate cuts have already led to a re-acceleration in excess liquidity – i.e. liquid money supply growth in excess of underlying economic momentum. This tends to be highly supportive for both the business cycle and above all asset price inflation.

In fact, these rate cuts by other central banks already imply an acceleration in excess liquidity growth at least until the end of the year 2025 and well into 2026 as well which should bode well, for bitcoin and other cryptoassets.

This has pushed more forward-looking expectations over the next 6 months (“animal spirits”) in some surveys like the Philly Fed manufacturing survey sharply higher which also corroborates the recent recovery we have seen across risky assets more broadly.

In general, excess liquidity growth tends to lead future expectations for manufacturing activity as well. We are already seeing an improvement in high-frequency macro indicators such as raw industrial commodity prices or copper-gold ratio that suggest a global recovery is already underway.

Our expectation is that global liquidity growth will continue to accelerate due to the preceding rate cuts and on account of the ongoing re-steepening of yield curves across the globe, which will most likely rekindle commercial bank lending and money supply growth.

Commercial banks are increasingly incentivised economically to extent loans when the yield curve steepens because of an increase in net interest rate margins – Banks perform so-called “maturity transformation” – borrowing on the short end and lending on the long end of the yield curve.

The resteepening of yield curves is not confined to the US (US Treasury curve) alone but also observable in regions like the Eurozone (Bund curve), UK (Gilt curve), and Japan (JGB curve). We have demonstrated the link between M2 money supply growth and the steepness of the US Treasury yield curve in our last monthly report as well.

Bottom Line: Heightened Middle East tensions and growing US recession risks have increased market risk aversion, yet historical data indicate such geopolitical crises are often followed by significant bitcoin rallies.

Meanwhile, sustained US dollar weakness, driven by capital repatriation, de-dollarization pressures, coupled with an outsized number of global rate cuts and re-steepening yield curves, is re-accelerating global liquidity and reinforcing a bullish macro tailwind for bitcoin.

A continuation of the Fed’s cutting cycle in July would be another bullish wild card in this environment.

On-Chain Developments

Corporate adoption remains the key demand driver in 2025. What is more is that this trend continues to accelerate. At the time of writing this report at the end of June 2025, the number of public companies that hold bitcoin on their balance sheet has almost doubled from 70 to 134 companies (+91%) within half a year.

It implies that more bitcoin treasury companies will be adding bitcoin to their balance sheets in 2025 alone than during the previous years since bitcoin’s genesis combined.

Next to the classical holder cohort of so-called “shrimps” (holdings < 1 BTC), the cohort of corporate buyers is adding stability to the market by limiting drawdowns on account of their price-agnostic buying behaviour. In general, we expect that the structural bid from corporations will likely reduce short-term downside risks during this bull cycle.

In general, there are the following major groups of spot bitcoin buyers:

Exchange Retail (short-term holders below 1 BTC = so-called „lettuce hands“): highly pro-cyclical
Exchange whales (short-term holders, >1k BTC): pro-cyclical
ETPs/ETFs: Retail-dominated, structural bid but also pro-cyclical (100 BTC – 1,000 BTC cohort)
Corporations: Price agnostic, increasing structural bid (1,000 BTC – 10,000 BTC cohort)
Exchange “Shrimps” (<1 BTC): accumulation addresses - Price agnostic, increasing structural bid, Dollar cost averaging (DCA)
Crypto hedge funds: Increasingly counter-cyclical

The structural bid from corporations as well as institutional ETP investors is likely going to dampen volatility as well. In fact, we have already seen lower realized volatility in bitcoin relative to other major equity indices despite record high uncertainty as demonstrated in one of our weekly reports.

Bitcoin ETP demand has also been quite positive – US spot bitcoin ETFs have been recording net inflows for 15 trading days straight at the time of writing this report.

All in all, both corporations and ETPs continue to soak up bitcoins in multiples of the new annual mined supply.

These structural demand drivers also continue to deplete bitcoin exchange balances which suggests that our main bull thesis of a pervasive demand overhang/supply deficit on exchanges still remains intact.

That being said, we have seen relatively weak accumulation activity more recently across all bitcoin wallet cohorts. The average accumulation score shown below measures the change in holdings across all bitcoin wallet cohorts and currently indicates only a slow increase in holdings over the past month:

Another indicator which points towards ongoing consolidation is "apparent demand" – it is slowing again and implying lower prices in the short term.

We are seeing similar developments in terms of whale exchange outflows which have recently slowed down and also general on-chain capital flows into bitcoin and other major cryptoassets that have been decelerating over the past 2 weeks.

Based on these observations, despite an overall bullish trend, it is quite likely that bitcoin will continue to consolidate in the short term until we see a renewed pick-up in accumulation activity and demand across different cohorts.

Bottom Line: Corporate adoption remains the primary demand driver, with the number of public companies holding bitcoin nearly doubling to 134 in just six months and providing a stable, price-agnostic structural bid alongside institutional ETP inflows. All in all, our main bull thesis for bitcoin of a pervasive demand overhang / supply deficit remains very much intact. However, weak accumulation across wallet cohorts and slowing on-chain demand suggest continued short-term consolidation until broader buying activity resumes.

Bottom Line

Performance: Bitcoin remained relatively resilient despite high economic policy uncertainty and heightened geopolitical risks in the Middle East. Bitcoin’s realized volatility remained below those of major equity indices such as the S&P 500. Despite transient consolidations and geopolitically driven drawdowns, the month’s data underscore two enduring drivers: (1) robust institutional demand - via ETPs and corporate treasuries - continuously drawing down supply, and (2) heightened macro-risk headwinds steering investors toward scarce, decentralized “portfolio insurance.” As trade-policy clarity and Fed easing loom, these tailwinds set a constructive backdrop for bitcoin heading into July.
Macro: Heightened Middle East tensions and growing US recession risks have increased market risk aversion, yet historical data indicate such geopolitical crises are often followed by significant bitcoin rallies. Meanwhile, sustained US dollar weakness, driven by capital repatriation, de-dollarization pressures, coupled with an outsized number of global rate cuts and re-steepening yield curves, is re-accelerating global liquidity and reinforcing a bullish macro tailwind for bitcoin. A continuation of the Fed’s cutting cycle in July would be another bullish wild card in this environment.
On-Chain: Corporate adoption remains the primary demand driver, with the number of public companies holding bitcoin nearly doubling to 134 in just six months and providing a stable, price-agnostic structural bid alongside institutional ETP inflows. All in all, our main bull thesis for bitcoin of a pervasive demand overhang / supply deficit remains very much intact. However, weak accumulation across wallet cohorts and slowing on-chain demand suggest continued short-term consolidation until broader buying activity resumes.

Appendix

Cryptoasset Market Overview

Cryptoassets & Macroeconomy

Cryptoassets & Multiasset Portfolios

Cryptoasset Valuations

On-Chain Fundamentals

Important information:

This article does not constitute investment advice, nor does it constitute an offer or solicitation to buy financial products. This article is for general informational purposes only, and there is no explicit or implicit assurance or guarantee regarding the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. It is advised not to rely on the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. Please note that this article is neither investment advice nor an offer or solicitation to acquire financial products or cryptocurrencies.

Before investing in crypto ETPs, potentional investors should consider the following:

Potential investors should seek independent advice and consider relevant information contained in the base prospectus and the final terms for the ETPs, especially the risk factors mentioned therein. The invested capital is at risk, and losses up to the amount invested are possible. The product is subject to inherent counterparty risk with respect to the issuer of the ETPs and may incur losses up to a total loss if the issuer fails to fulfill its contractual obligations. The legal structure of ETPs is equivalent to that of a debt security. ETPs are treated like other securities.