Bitwise executives listed factors like deglobalization, potential US tax cuts, and yield curve control as possible key catalysts for BTC price. Meanwhile, Strategy is edging closer to potential S&P 500 inclusion, driven by changes in digital asset accounting rules and its massive Bitcoin holdings. Several US state pension funds have also invested heavily in Strategy stock.
Economic Shifts Create a Perfect Storm for Bitcoin’s Rise
Bitcoin is being hailed as a "generational opportunity" in a time of heightened global uncertainty, and Bitwise Asset Management executives recently pointed to economic and political developments that could drive the crypto to new heights. Jeff Park, the firm’s head of alpha strategies, warned that the world is on the brink of extreme instability, and referred to a series of economic and political shifts that could greatly impact financial markets.
Among these is a newly proposed House Republican budget plan that seeks to raise the debt ceiling by $4 trillion, which is a move that could further increase government spending. Park also mentioned the growing trend of deglobalization, particularly the heightened threat of reciprocal tariffs introduced by former President Donald Trump.
Adding to the volatility, Park suggested that markets are approaching a state of irrationality, referring to potential tail risks associated with a gold rush, the GOP’s proposed tax cuts of up to $4.5 trillion, and the possibility of yield curve control (YCC). YCC is a policy in which central banks cap long-term interest rates to stimulate borrowing and investment, and it could introduce new dynamics into the economy. Meanwhile, Federal Reserve Chair Jerome Powell also recently pushed back on expectations of aggressive rate cuts by stating that the US economy remains strong and that there is no urgency to adjust interest rates at this time.
Bitwise CEO Hunter Horsley is optimistic about Bitcoin’s trajectory, and suggested that investors are underestimating the scale of Bitcoin’s mainstream adoption in 2024. Park further reinforced this view by pointing out Bitcoin’s historically low implied volatility (IV) percentile, which is a key measure of risk in the options market. The IV percentile currently sits at 12.3, which means that Bitcoin's volatility is at one of its lowest levels over the past year, a condition that traders often interpret as a buying opportunity.
Crypto fear and greed index (Source: Alternative)
The cryptocurrency has been trading in a range of $90,000 to $100,000 so far this year, and reached a peak of $108,786 late last month after Trump’s inauguration. The Crypto Fear & Greed Index currently sits at 51 out of 100, indicating a neutral market stance. This is an improvement from last week’s “Fear” level but is still below the more optimistic sentiment seen in past months.
Bitcoin Could Secure Strategy’s S&P 500 Spot
Strategy (MSTR) is moving closer to potential inclusion in the S&P 500, but there is still a key hurdle to overcome before it meets all eligibility requirements. The company needs to report positive GAAP net income over the trailing 12 months, which requires very strong first-quarter 2025 earnings to offset losses from the previous three quarters.
This goal has become more attainable with the implementation of the Financial Accounting Standards Board (FASB) digital asset accounting rule, which mandates that companies report their Bitcoin holdings at fair value. Under the previous accounting method, Strategy had to record its Bitcoin at the lowest price level during a given period, which led to large impairment losses. In the fourth quarter of 2024, the company valued its Bitcoin holdings at under $16,000 per token despite Bitcoin closing the year at approximately $94,000. This resulted in a $1 billion impairment loss.
Analyst Richard Hass shared some details about the financial threshold required for Strategy to meet the earnings criteria. If the company's Bitcoin holdings remain unchanged until March 31, Bitcoin must close the first quarter above $96,337 for the company to achieve positive earnings over the past four quarters. With fourth-quarter net income at negative $671 million, Strategy will need to generate $1.113 billion in net income for the first quarter of 2025 to qualify. Given the company’s current holdings of close to 478,740 BTC, this target is achievable if Bitcoin prices remain strong.
The possibility of S&P 500 inclusion also attracted the attention from market analysts. Benchmark’s Mark Palmer shared that the revised FASB accounting guidance improves Strategy’s case for entry. He noticed that Strategy outperformed every existing index constituent over the past four years, making exclusion from the index an unexpected outcome.
Palmer highlighted that while Strategy’s recent inclusion in the Nasdaq-100 was a major achievement, entry into the S&P 500 will be an even greater milestone. A development like this could serve as validation of the company’s Bitcoin-focused strategy, requiring all S&P 500 index funds to hold Strategy shares and providing indirect Bitcoin exposure to a broader range of investors. If Bitcoin prices maintain strength and the company continues accumulating tokens, S&P 500 inclusion could soon become a reality.
US State Funds Hold $330M in Strategy Stock
Twelve states in North America reported holding shares of Strategy in their state pension funds or treasury. The total investment totaled $330 million by the end of 2024. Among the states with the highest exposure are California, Florida, Wisconsin, and North Carolina, with California leading the pack.
The California State Teachers Retirement System holds 285,785 shares valued at approximately $83 million, while the California Public Employees’ Retirement System owns 264,713 shares worth around $76 million. Both funds also hold large positions in Coinbase, with combined investments of more than $155 million.
Florida’s State Board of Administration Retirement System fund has 160,470 shares of Strategy valued at $46 million, and the State of Wisconsin Investment Board owns 100,957 shares worth $29 million. The Treasurer of the State of North Carolina has invested $22 million in Strategy stock, while New Jersey’s Police and Firemen’s Retirement System and Common Pension Fund collectively hold $26 million. Other states with public funds invested in the company include Arizona, Colorado, Illinois, Louisiana, Maryland, Texas, and Utah.
Strategy positioned itself as the world’s largest corporate holder of Bitcoin, with 478,740 BTC valued at approximately $46 billion at current market prices. Its latest acquisition of 7,633 BTC was made at an average price of $97,255 per coin between Feb. 3 and Feb. 9. Holding Strategy stock allows investors, including public pension funds, to gain exposure to Bitcoin indirectly.
The firm recently rebranded to Strategy on Feb. 5 after adopting a Bitcoin-centric marketing approach. Since the start of 2025, its stock climbed 16.5%, while over the past year, it has surged by 383%. This allowed it to outperform the broader crypto market, which gained 62% during the same period.
