In the whirlwind of financial markets, it's easy for investors to get swept up in daily price movements and fleeting sentiment. We've seen Bitcoin and Ethereum navigate challenging waters recently, with the Crypto Fear & Greed Index dipping sharply into 'extreme fear.' Such times often prompt a crucial question: are our foundational beliefs still sound? For those invested in Bitcoin, the answer, when looking at the bigger economic picture, appears to be a resounding yes.
The core thesis for Bitcoin, its long-term trajectory and role in the global financial system, remains fundamentally unchanged. As macro analyst James Lavish insightfully points out, the real story isn't found in the temporary dips or the emotional swings of the market. Instead, it lies in the relentless fiscal policies of governments, the expansive liquidity injections by central banks, and the quiet, strategic accumulation by sophisticated institutional investors. These are the powerful, underlying currents shaping our economic future, and they position Bitcoin not as a mere speculative asset, but as an essential component of a diversified portfolio.
“Seeing many bad takes on Bitcoin this morning, so perhaps we should return to first principles: Governments will keep overspending, global liquidity will keep expanding, and long-term, Bitcoin will reflect inflation that continues ad infinitum.”
This perspective grounds Bitcoin's value proposition not in short-term trading patterns, but in enduring macroeconomic trends. We are witnessing a twin phenomenon unfold before our eyes: the exponential growth of government debt and the gradual debasement of traditional fiat currencies. In this environment, Bitcoin's relevance only grows stronger.
The Era of Perpetual Government Spending
For most major economies, the concept of fiscal discipline seems to be a relic of a bygone era. Governments worldwide consistently operate with significant budget deficits, often driven by political imperatives, social programs, and the continuous need for economic stimulus. Take the United States, for example. In fiscal 2025 alone, the nation reported a staggering budget deficit of $1.775 trillion, with overall government expenditures soaring to $7.01 trillion by the year's end. Even amid calls for austerity, proposals for large-scale stimulus, such as renewed suggestions for $2,000 direct checks to households, highlight how elevated spending has become a structural and seemingly permanent feature of American fiscal policy.
This trend isn't isolated to the U.S. Many developed nations face similar pressures, from aging populations requiring more social services to geopolitical tensions necessitating increased defense spending. The easy availability of credit, facilitated by central banks, further enables governments to continue this pattern of spending beyond their means. The consequence is a continuous expansion of sovereign debt, which inevitably leads to more money creation to service that debt, completing a cycle of fiscal expansion.
Global Liquidity Explodes to Unprecedented Levels
Hand in hand with government spending is the dramatic expansion of global liquidity, a term that essentially describes the total amount of money circulating within the world's financial system. This broad money supply reached an astounding $142 trillion by September 2025, marking a colossal 446% increase since the year 2000. To put that into perspective, global money has more than quadrupled in just a quarter-century. The year-over-year growth rate alone hit 7%, with an even sharper 9.1% spike observed so far in 2025, demonstrating an accelerating pace of money creation.
Who are the biggest contributors to this monetary flood? China now leads the pack with an immense $47.1 trillion in circulating money, reflecting its massive economic expansion and credit growth. The United States follows with $22.2 trillion. Across developed markets, central banks continue to play a pivotal role, actively flooding the financial system through various mechanisms, stretching the global monetary base to new, dizzying highs. This overabundance of liquidity has become a deeply ingrained feature of the global macro landscape, setting the stage for persistent inflationary pressures.
- The Money Printers Run Hot: Central banks utilize tools like quantitative easing (QE) and maintaining ultra-low interest rates to inject vast sums of money into the economy.
- Debt Monetization: Governments issue bonds to fund deficits, and central banks often buy these bonds, effectively creating new money to finance government spending.
- Credit Expansion: A loose monetary policy encourages banks to lend more, further increasing the money supply through credit creation.
Institutional Investors See Beyond the Noise
While short-term volatility might rattle retail investors, institutional players are demonstrating rising conviction, using dips as opportunities for strategic accumulation. This behavior highlights a clear distinction between emotional trading and calculated, long-term investment strategies. A compelling example comes from Harvard, home to one of the world's most closely watched endowments. In the third quarter of 2025, Harvard significantly tripled its Bitcoin ETF holdings, pushing its position to a substantial $443 million. This remarkable 257% increase propelled IBIT (iShares Bitcoin Trust) to become Harvard's top allocation, surpassing even traditional blue-chip assets.
This isn't an isolated incident. Many other endowments, pension funds, and major investment firms are quietly building their exposure to digital assets. Their decisions are based on deep research into the fundamental macro trends discussed above, rather than daily price fluctuations. Their sustained investment, even during downturns, underscores a broader trend: the institutional adoption of Bitcoin is not just intact, but accelerating, indicating a sophisticated understanding of its long-term value proposition.
Bitcoin: The Ultimate Hedge Against Infinite Debasement
Every expansionary fiscal policy, every new deficit, and every round of government stimulus collectively points to one undeniable reality: inflation is not a temporary phenomenon; it's here to stay. In this environment, Bitcoin's value proposition strengthens with each increase in the global money supply. As the total money circulating worldwide surges past $140 trillion, and the largest economies continue their printing presses, Bitcoin emerges as far more than just a speculative asset. It transforms into a vital hedge against what many see as the infinite debasement of fiat currency.
Unlike fiat currencies, which can be printed at will, Bitcoin has a mathematically enforced, finite supply of 21 million coins. This digital scarcity, combined with its decentralized and censorship-resistant nature, makes it an ideal store of value in an inflationary world. When your purchasing power is consistently eroded by ever-expanding money supplies, an asset with a fixed and predictable supply becomes profoundly attractive.
In the face of constant negative commentary that often accompanies market dips, it's crucial to refocus on Bitcoin's robust fundamentals. The overarching backdrop of outsized government deficits and ceaseless liquidity creation hasn't changed. Governments will undoubtedly continue their overspending habits. Global liquidity will almost certainly continue its expansion. Consequently, Bitcoin’s future remains firmly anchored in the expectation of inflation that, by many measures, continues ad infinitum.
As Scott Melker, also known as The Wolf of All Streets, aptly states, the precise entry point matters less when you grasp the long-term vision:
“If you believe that bitcoin price is going much higher over time, then it makes almost no difference whether you buy at 94k, 97k or 100k. You just buy.”
This sentiment encapsulates the enduring conviction that defines the Bitcoin long-term thesis: it is truly built for moments like these, providing a necessary counter-balance in an era of unprecedented monetary expansion.
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