Trump's Spending Bill Shifts Markets Into Goldilocks

The S&P 500 and Nasdaq have finally transitioned from NEUTRAL to BULLISH momentum, with global markets now pricing in a GOLDILOCKS top-down market regime—the most positive RISK-ON environment in our macro framework ahead of reflation, stagflation, and deflation. We believe the Trump administration is executing a deliberate fiscal reflation strategy to tackle America's mounting debt burden, choosing growth over austerity to mathematically shrink the deficit-to-GDP ratio. Treasury Secretary Scott Bessent's rejection of the CBO's anemic 1.8% growth forecast in favor of GDP north of 3% by mid-2026 signals Washington's commitment to this approach, likely accelerated by passage of the One Big Beautiful Bill Act (OBBBA) adding roughly $3 trillion in debt-financed stimulus. While tariff fears dominate headlines, we view trade policy as a distraction from the real story: fiscal largesse designed to reflate nominal growth and organically delever the public sector balance sheet. This paradigm shift is structurally bullish for risk assets including equities, credit, Bitcoin, and gold while creating sustained headwinds for Treasury bonds and the US dollar.

TLDR: We recommend continuing to dollar-cost average into Bitcoin as a savings vehicle, as fiscal reflation will cause the value of the dollar to decrease and asset prices to rise.

Bitcoin’s Valuation Is Elevated But Has Upside

Bitcoin's AVIV Z-score sits at 0.84, placing current valuation in the 78th percentile—elevated but nowhere near the 1.25 speculative threshold that marks the 85th percentile danger zone. This reading suggests the market has priced in significant optimism around current macroeconomic conditions but retains meaningful upside runway if OBBBA passes. Should the Senate approve this $3 trillion deficit-funded stimulus package, we expect Bitcoin and stocks will benefit from the massive liquidity injection. The distribution shows plenty of historical precedent for higher readings during bull market peaks, giving Bitcoin room to run as the reflation trade gains momentum.

TLDR: Our on-chain valuation metric supports continued upside toward 120K+ if OBBBA's $3T stimulus passes in the Senate.

LTH Supply Building Between $95K-$100K

Short-term holders show 85% in profit while long-term holders sit at a staggering 99.4% profitability, creating a clear roadmap for potential support levels. The critical supply cluster sits around $96K where STH cost basis concentrates, with 517K BTC held by short-term players at the $105K level and a formidable 309K BTC LTH wall near $98K. This distribution pattern suggests any meaningful correction should find strong buying interest in the $95K-$100K zone, where both technical support and fundamental holder behavior align. As OBBBA's $3 trillion fiscal stimulus proposal gains Congressional traction, these supply zones become even more relevant as institutions position for the next leg higher.

TLDR: We think Bitcoin’s downside remains well-contained with major support clustering between $95K-$100K.

Institutional FOMO Keeps Price Above $100K

The past 30 days reveal a classic wealth transfer pattern as smaller holders liquidate into institutional demand above the psychological $100K level. Retail cohorts from shrimps to fish have shed a combined 28.2K BTC (−1.8K, −13.7K, and −12.7K respectively), while sharks accumulated a massive +87.9K BTC, clearly marking institutional entry points. Even whales and mega-whales reduced positions by 45.4K BTC combined, suggesting smart money rotation from early holders to fresh institutional capital. This redistribution pattern suggests institutions may be FOMOing into Bitcoin as it becomes a more common conversation, with public companies and foreign nations increasingly opening to Bitcoin adoption.

TLDR: Over the past 30 days, we have seen significant institutional accumulation above $100K while retail investors are unfortunately selling.

Leverage Reset Clears Runway for Fresh Rally

The May 30th long liquidation event that wiped $141M and drove Bitcoin from $110K to $103K has completely reset the derivatives landscape. While the new all-time highs generated excessive enthusiasm among traders, the recent correction simply flushed out overleveraged positions rather than signaling any fundamental weakness. Current liquidation volumes hover near zero, indicating the speculative excess that built up during the initial all-time high breakout has been thoroughly cleansed from the system. With leverage now reset and OBBBA fiscal reflation expectations building, the futures market provides clear runway for the next impulsive move higher without the drag of overleveraged positions.

TLDR: The recent sell-off from $110K to $103K was driven from overzealous traders buying Bitcoin on leverage, which has now washed out of the market.

Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.