Bitcoin Breaks $120K as Washington Embraces Crypto

Bitcoin surged past $120,000 for the first time in history, marking a milestone in digital asset adoption amid a pivotal week of political, regulatory, and market developments in the United States. Enthusiasm was palpable across both retail and institutional sectors as the U.S. House of Representatives launched its highly anticipated "Crypto Week," a legislative push that could redefine how the financial system interacts with digital assets.

The landmark price movement peaked at $123,205 before settling near $121,600 in    New York trading. The rally has been driven by a confluence of factors: inflows into crypto investment products, favourable macroeconomic indicators, and sweeping U.S. policy shifts that signal unprecedented political support for digital assets.

Notably, many analysts and commentators have begun referring to Bitcoin’s trajectory as having entered an acceleration phase. Since the House passed Trump’s so-called “Big Beautiful Bill” on July 3rd, Bitcoin has surged more than $15,000. The cryptocurrency made multiple new all-time highs intraday, suggesting a parabolic regime that is increasingly being fueled by structural macroeconomic imbalances.

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Acceleration Phase: Bitcoin, USD, and the Global Deficit Trade

Bitcoin’s meteoric rise is taking place in tandem with key signals that markets are undergoing regime change:

• The U.S. Dollar Index (DXY) is down 11% in just six months.
• Gold prices are also surging.
• U.S. posted a $316 billion deficit for May — the third-largest monthly deficit in history.
• Institutional capital is rotating aggressively into Bitcoin ETFs, with BlackRock’s $IBIT reaching $76 billion in AUM in under 350 days — faster than it took gold ETF $GLD over 15 years.

This synchronized rise of Bitcoin, gold, and yields — while the dollar declines — is not business as usual. According to the Kobeissi Letter, this could mark the beginning of one of the most powerful reallocations into hard money assets in modern financial history.

Bitcoin, in particular, appears to be front-running the structural cracks in the system. Since April, price action has been fueled by two key divergences:

• April 9: Post-tariff pause policy messaging
• July 1: House passage of sweeping crypto legislation

The surge appears less tied to immediate macro relief (such as rate cuts) and more to a breakdown in confidence around fiscal discipline.

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Institutional Allocation: The 1% BTC Thesis

Family offices and hedge funds that previously avoided crypto are now openly allocating. “Even conservative funds are moving toward a 1% BTC allocation,” said one institutional strategist this week. This marks a definitive shift from exploratory diligence to active participation.

S&P 500 in Bitcoin terms is now down 15% YTD, and has lost 99.98% of its value when priced in BTC since 2012  - a stat being widely cited in crypto’s latest positioning deck. The narrative of Bitcoin as both an outperforming asset and a store of value has reached full saturation among allocators.

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ETH Shorts at All-Time Highs

As of July 14, leveraged short interest on Ether has reached record highs, according to ZeroHedge. This setup is reminiscent of the conditions seen before the April 2025 bottom, raising the potential for a short squeeze. However, Bitcoin is not exhibiting the same extreme short positioning. While funding rates for BTC have occasionally dipped negative in recent sessions, signalling cautious sentiment, they are far from the aggressive short buildup seen on ETH. Instead, BTC flows, and positioning appear more balanced, supported by robust spot inflows and macro tailwinds.

As the Kobeissi Letter observed, “We are witnessing one of the most historic BTC moves in real time. All metrics, from on-chain to flow to macro, are confirming it.” This suggests BTC's move is being driven more by organic demand and macro conviction than by a short squeeze dynamic.

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Crypto Inflows Hit Records

According to CoinShares, digital asset investment products saw $3.7 billion in net inflows last week, marking the second-largest weekly inflow on record. Total assets under management surged past $211 billion, surpassing the $200B mark for the first time. Notably, July 10 alone recorded the third-highest daily inflow ever. Bitcoin-based products led the way with $2.7 billion in inflows, pushing their total AUM to $179.5 billion—now equaling 54% of all AUM held in gold ETFs. Ethereum also showed strong institutional appeal, with ETH-focused funds attracting $726 million in a single day, led by $499 million into BlackRock's ETHA. July inflows to ETH ETFs now total $2.27 billion.

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Regional Flows and Market Volume

U.S.-based funds accounted for virtually all of last week’s $3.7 billion in net inflows into digital asset products. Switzerland ($65.8M) and Canada ($17.1M) followed at a distant second and third. Meanwhile, Germany (-$85.7M), Sweden (-$15.7M), and Brazil (-$7.5M) experienced net outflows.

This stark geographic divergence signals that the current bull cycle is being driven predominantly by U.S. investors and institutions, not a globally distributed rally. Trading volume for crypto investment products reached $29 billion last week — double the 2025 average - but the capital is heavily concentrated in North America.

The data underscores how legislative clarity, ETF approval, and vocal political backing in the U.S. are positioning the country as the epicenter of institutional crypto adoption, while other regions lag behind due to uncertainty or restrictive regulation.

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Strategy’s Big Bet & Vanguard’s Quiet Accumulation

MicroStrategy, now simply known as Strategy (ticker: MSTR), added 4,225 BTC to its holdings this week for $472.5 million at an average cost of $111,827 per coin, bringing its total to 601,550 BTC. The move reinforces Strategy's position as the de facto Bitcoin treasury.

Meanwhile, Bloomberg reported that Vanguard, a $10T asset manager historically critical of crypto, has become Strategy's largest shareholder, owning 20 million shares or 8% of its equity. This unexpected turn reflects a broader trend of Wall Street firms doubling down on digital assets despite previous reservations.

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Crypto Legislation: From Stalemate to Breakthrough

In a landmark week for digital asset regulation, Congress advanced and passed a suite of crypto-focused bills, culminating in the signing of the GENIUS Act, the first federal law governing stablecoins.

Dubbed “Crypto Week” in Congress, the momentum shifted after a dramatic 9-hour delay and a failed initial vote on a key procedural rule. A push from former President Trump, who promised to attach anti-CBDC measures to the defense bill, rallied GOP support and flipped the outcome. The House passed the rule 217–212, allowing votes on three major bills:

• GENIUS Act: Mandates 1:1 USD backing for stablecoins, annual audits for large issuers, and clear rules for foreign-issued tokens.
• CLARITY Act: Outlines a regulatory framework distinguishing between securities and commodities in the digital asset space.
• Anti-CBDC Act: Bars the Federal Reserve from issuing a Central Bank Digital Currency directly to consumers.

On Friday, Trump signed the GENIUS Act into law during ahigh-profile White House ceremony, calling it “a giant step to cement American dominance of global finance and crypto technology.”

Key elements of the new law:

• Stablecoins must be fully backed by safe assets such as short-term Treasuries.
• Issuers will be regulated at the federal or state level, with stricter oversight for large-scale players.

Industry leaders including Coinbase’s Brian Armstrong, the Winklevoss twins, and Robinhood CEO Vlad Tenev attended the signing. Supporters say the law provides long-needed clarity, strengthens the U.S. dollar’s role in crypto markets, and paves the way for broader institutional adoption.

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Ethereum Rally: Institutions Join the Surge

Ethereum rallied 7.4% this week to $3,342, reaching as high as $3,416. ETH ETFs recorded their biggest daily inflow ever on Wednesday: $726.74M across nine ETFs. Analysts cite fundamentals and rotation from BTC as key drivers.

Notable highlights:

• ETH ETFs own 4% of ETH’s total market cap.
• SharpLink Gaming now holds more ETH than the Ethereum Foundation (280,706 ETH).
• ETH market cap has grown $150B since July 1 amid a historic short squeeze.

Arkham data shows insiders including Trump-affiliated World Liberty Financial executed $5M ETH purchases in the last 24 hours, further fueling momentum. ETH/BTC ratio remains historically low, suggesting room for further upside.

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Ripple, Solana, Altcoins Join the Party

XRP rose 25% to $3.56, Solana surged 17.4% to $189.26, and SUI hit $4.2 (+22.44%). Bitcoin dominance fell to 63.09%, reinforcing sentiment that we’re entering an altcoin season.

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Mortgage Market Eyes Crypto

Federal officials have instructed Fannie Mae and Freddie Mac to explore including regulated crypto assets in mortgage underwriting. While preliminary, the review could allow crypto to count toward eligibility without liquidation. Industry reactions are mixed, with some celebrating a breakthrough and others warning of volatility and fraud risks.

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Cantor Fitzgerald & Blockstream to Launch BTC Treasury Firm

A new venture between Cantor Fitzgerald and Bitcoin pioneer Adam Back (Blockstream) could contribute up to 25,000 BTC (~$3B). The firm aims to offer advisory and asset management services centered around BTC.

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New Institutional Milestones & Political Signals

Jack Dorsey’s Block subsidiary, $XYZ, is officially set to join the S&P 500 — marking a historic moment as one of the first crypto-native companies to be recognized by a major equity benchmark. The index inclusion underscores the increasing institutionalization of the blockchain sector and is expected to boost $XYZ’s visibility, liquidity, and passive fund inflows.

Separately, Peter Thiel-backed digital asset exchange Bullish has formally filed its IPO with the SEC. The public listing of a well-capitalized, institutionally aligned crypto firm signals confidence in long-term industry fundamentals and may attract a new class of equity investors to the sector.

Meanwhile, President Trump reinforced his crypto-forward stance with several key statements during the GENIUS Act signing ceremony:

• “I’m also committed to signing landmark crypto market structure legislation this year to grow the industry.”
• “Crypto has gone up more than any stock. Crypto makes the dollar look good. Crypto is good for the dollar, the nation.”
• “The stablecoin bill is a massive validation for crypto.”
• “The GENIUS Act will ensure America will have global dominance in crypto technology.”

These comments, paired with recent legislation, amplify the message that U.S. policy is turning decisively pro-crypto. The narrative shift has energized investors and institutional allocators alike, as regulatory clarity now appears to be a tailwind rather than a risk.

Bitcoin is up approximately 27% YTD with a $900B market cap increase since April. Ethereum has added $150B in July alone. With 401K inclusion, GENIUS and CLARITY Acts passed, and growing bipartisan support, crypto is now an unavoidable pillar of the global financial system.

The U.S. dollar faces pressure, while BTC offers a hedge. Investors are recalibrating portfolios. Institutions can no longer ignore crypto.

We maintain our conviction: strategic accumulation in Bitcoin, Ethereum, and select altcoins continues to offer asymmetric upside.

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Macro Check: CPI, PPI, and Treasuries

• June CPI (Jul 15):
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  • Core CPI m/m: 0.2% (vs. 0.3% est)
  • CPI m/m: 0.3% (vs. 0.3% est)
  • CPI y/y: 2.7% (vs. 2.6% est)
  • Empire State Manufacturing Index: 5.5 (vs. -8.3 prev)
• PPI (Jul 16):
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  • Core PPI m/m: 0.0% (vs. 0.2% est)
  • PPI m/m: 0.0% (vs. 0.2% est)
• Retail Sales (Jul 17):
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  • Core Retail Sales m/m: 0.5% (vs. 0.3% est)
  • Retail Sales m/m: 0.6% (vs. 0.1% est)
  • Unemployment Claims: 221K (vs. 233K est)
  • Philly Fed Manufacturing Index: 15.9 (vs. -1.2 prev)

These inflation and activity data points support a dovish Fed stance, fueling investor appetite for risk assets.

Meanwhile, foreign holdings of U.S. Treasuries jumped by $32.4B to $9.05T in May:

• Canada: +$65.8B (record $430B)
• Japan: +$500M ($1.14T)
• UK: +$1.7B (record $809.4B)
• China: -$900M ($756.3B), lowest since 2009

S&P 500, Nasdaq 100, DXY, and Gold:

• S&P 500: +0.91% this week, flirting with record highs
• Nasdaq 100: +1.23% amid tech-driven momentum
• DXY: -0.4%, down 10% YTD, under pressure from fiscal uncertainty
• EUR/USD: Up 0.6% on ECB dovishness and dollar weakness
• Gold: +0.3% to $2,464/oz, benefiting from inflation uncertainty

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What We’re Watching Next Week

• Trump’s rumored executive order on 401K crypto access
• SEC responses to ETH ETF amendments
• Treasury market impact on stablecoin reserves
• Ethereum breakout past $3,500
• Next-gen altcoin rotation and Layer 2 activity
• Fed Chair Powell speech (July 22)
• U.S. Unemployment Claims & Existing Home Sales (July 23–24)
• Flash PMIs from the U.S. and Eurozone (July 24)
• ECB Monetary Policy update (July 24)
• U.S. Core Durable Goods Orders & New Home Sales (July 25)