According to Odaily, this week has seen cryptocurrencies outperform traditional assets, driven by growing optimism surrounding U.S. policy initiatives and a persistent tightening of Bitcoin supply. A report from Bitwise Europe attributes this surge to discussions about the potential establishment of a strategic Bitcoin reserve by the United States. Pennsylvania has already enacted legislation supporting such reserves, sparking speculation that other states may soon follow suit. Betting activity on Polymarket has amplified these expectations, with the probability of establishing a national Bitcoin reserve soaring to over 50% last week.
The report delves into Bitcoin's supply constraints amid increasing demand from ETFs and corporations. Inflows into U.S. spot Bitcoin ETFs have surged, surpassing the overall growth in Bitcoin supply, leading to an imbalance between supply and demand. This shortage is reflected in Bitcoin's liquidity and high liquidity supply indices, both of which have plummeted to historic lows. Corporations are increasingly adopting Bitcoin as a reserve asset, with companies like Microstrategy making significant purchases, reinforcing this trend.
Researchers further explain that Bitcoin is not the only cryptocurrency benefiting from a more transparent regulatory environment in the U.S. Altcoins, including XRP, and meme coins like DOGE have also made progress. The Department of Government Efficiency has adopted a crypto-friendly stance, adding momentum to these assets, particularly DOGE. However, Ethereum has not kept pace, possibly due to capital flows favoring other cryptocurrencies. On a broader economic scale, the U.S. Consumer Price Index (CPI) data for October aligned with forecasts. Combined with other indicators, this has strengthened expectations of a potential interest rate cut by the Federal Reserve in December, introducing another variable to the evolving cryptocurrency narrative.
