Bitcoin traders are treating capital flows like a macro bet, and one of the Fed’s data changes poses a hidden risk
Important points
- Institutional demand for Bitcoin can be monitored through AUM snapshots of issuers such as BlackRock’s IBIT. $69,427,196,929 as of January 28, 2026 It is listed on the product page.
- Weekly crypto fund flows are starting to trade like macro positioning, and CoinShares is documenting a shift from $454 million From weekly outflow amount (January 12th) $2.17 billion In addition to weekly inflows (January 19th); $378 million Friday’s reversal is related to geopolitics and tariffs.
- Since the Fed’s H.6 release clock (release date) is known, liquidity monitoring depends on the health of the data and the frequency of releases. January 27, 2026), and FRED’s weekly M2 series has ended.
- The market structure is such that hedgability and benchmarkability drive demand, and CME reports that Notional amount of $3 trillion 2025 Cryptocurrency Derivatives Activity and BRR for CF Benchmarks, which serves as a NAV/iNAV input for CME’s Settled Indices and Investment Products.
- Scenario bands can be used to stress test assumptions rather than outsource conviction, such as ARK’s 2030 bearish/base/bullish targets or the Larry Fink and Citi conditional scenarios reported by MarketWatch.
who is this for
- Long-term BTC holders who want a testable “Bitcoin investment theory” built around updatable inputs, rather than a price narrative.
- Swing and macro-driven traders who treat cryptocurrencies as expressions of rate and liquidity and require repeatable monitoring routines.
- Allocators and advisors for institutions that require benchmarking, hedging, and flow piping mapped to quarterly processes.
Highlights of this quarter
What is Bitcoin (and what should the “investment thesis” be)?
Bitcoin investment theory is a set of demand factors associated with indicators that can be rechecked on a schedule, with conditions to change positioning.
In 2026, the substantive renewal loop will become clearer. Demand for BTC is more observable as it goes through spot Bitcoin ETFs, regulated derivatives exchanges, and benchmark indices used to plumb the product.
The BTC thesis can be summarized in one paragraph as follows: Whether BTC allocations become permanent will depend on whether institutional access points continue to hold the assets and attract net inflows over several weeks.
It also depends on whether macro liquidity and discount rate expectations are compatible with risky assets at the pace that investors actually trade them. It also depends on whether market structures continue to support benchmark pricing and large-scale hedging.
A sustained reversal of flows with a resurgence in macro prices weakens this theory. Stock prices will also fall if liquidity measurements are disrupted due to data disruptions, or if regulated participation or benchmark usage worsens.
For readers mapping BTC into a broader portfolio, this framework is combined with a dollar safety narrative and alternative behavior monitors. A reference point is the ECB’s discussion on safe asset behavior, alongside previous reporting on the safety of the dollar and the Treasury’s positioning.
7 long-term BTC demand factors (and indicators to prove each)
The point is measurement. Each of the drivers below has a “proof” input and cadence, so you can update your paper without having to start over.
| driver | Why it matters (traceable) | primary metric | Update frequency | what would change my mind |
|---|---|---|---|---|
| 1) Institutional rails (ETFs, allocators) | Access to change who sets the limit bid and how fast the flow changes | A snapshot of IBIT’s net worth “as of”. CoinShares Weekly Flow | Daily snapshot, weekly flow reading | Multi-week net outflow with macro-repricing story |
| 2) Macro liquidity and discount rate | BTC liquidity sensitivity can only be addressed if proxies are updated reliably | Pace of FRB H.6 releases. Avoid the obsolete weekly M2 and use monthly M2SL if you prefer | H.6 Per Release/Monthly Proxy Checks | Dashboard inputs are broken or no longer match the release calendar |
| 3) Durability of market structure (depth of derivatives) | Hedging ability supports larger position sizing | Hypothetical CME, ADV, ADO, LOIH | Quarterly/Annual Review | Participating delegates are rolled over in venue reports |
| 4) Benchmark piping | Benchmarking connects spot markets to settlement and commodity NAV processes | Role of BRR in CME settlement and NAV/iNAV determination | Ongoing (structural) | Changes to benchmark usage in product and venue documentation |
| 5) Safety zone competition between markets | Stress correlations can reprice “hedging” assets and change the direction of marginal flows. | ECB framework for atypical USD/Treasury bond hedging actions. Monitoring stress regime | Event-driven quarterly review | A period of sustained stress during which the premise of “default hedging” collapses |
| 6) Network security and resilience (context) | Security budget and resilience will be monitored in parallel with institutional implementation | hash rate series | weekly/monthly | Permanent degradation of security proxy |
| 7) Standardized position sizing description | Institutions and advisors shape demand by employing heuristics | Allocation “rules” and policy constraints in portfolio discussions | quarterly | Policy or platform constraints lead to tighter position sizing paths |
The drivers of ETFs are already measurable. BlackRock’s product page lists IBIT’s net worth. $69,198,322,977 as of January 27, 2026.
CoinShares’ January 2026 report shows how quickly the flow regime can reverse. For the week covered in the January 12 update, CoinShares reported $454 million Including leakage $405 million From Bitcoin.
CoinShares tied the move to “diminished expectations” of a March interest rate cut by the Federal Reserve. A week later, CoinShares reported. $2.17 billion Includes weekly inflows $1.55 billion to Bitcoin.
CoinShares also $378 million Friday’s reversal following headlines about “diplomatic escalation over Greenland” and tariffs. A process built around weekly flow interpretations fits that reality better than a one-time “institution arrived” narrative.
Macro measurements have similar limitations. The Fed has published its H.6 “Money Stock Measures” page, and its release date is January 27, 2026.
FRED has separately notified users that the weekly M2 series has been discontinued and directed users to the seasonally adjusted monthly series (M2SL). Liquidity dashboards that rely on obsolete series can fail without any obvious errors.
For the network security context (driver #6), papers should treat hash rate as a monitoring input rather than a single-cause explanation. The reference source is YCharts’ Hash Rate series, which also includes additional information on Hash Rate Milestone Coverage.
BTC Watchlist: Metrics Dashboard, Calendar, Paper Scorecard
Monitoring routines are only useful if they can withstand calendar time and data changes. The goal is to build a dashboard that works even if the series stops updating or changes its release schedule.
Metrics Dashboard (minimum viable)
| category | metric | where to pull | cadence | How to read |
|---|---|---|---|---|
| ETF rail | IBIT net worth (current) | Publisher page: iShares IBIT page | Weekly review (daily if necessary) | See changes that last for weeks, not just one day |
| Fund flow mechanism | Weekly flows, BTC shares, reversal notes | CoinShares Weekly Flow | weekly | Categorize as risk-on/risk-off and record cited catalysts |
| macro rhythm | H.6 Release Schedule | Federal Reserve System H.6 | Per release schedule | Use known release dates to avoid “stale macros” |
| Liquidity proxy health | Avoid weekly M2 (obsolete) and use monthly M2SL if needed | Fred M2 news | monthly | Make sure the series continues to be updated and consistent with your process |
| Risk transfer within the organization | CME Cryptographic Concepts, ADV, ADOI, LOIH | CME Crypto Highlights | Quarterly/Annual | Using participation metrics as a proxy for organizational commitment |
| benchmark plumbing | Role of BRR in payment and NAV/iNAV input | CF Benchmark BRR Document | quarterly review | Ensure benchmark dependencies remain intact |
| Network security (context) | Bitcoin network hash rate series | YCharts Hash Rate | weekly/monthly | Treated as monitoring input. Avoid single-variable causation |
| safe haven competition | Correlation regime watch list | ECB safe zone function | event driven | Track episodes where the US dollar and yields move in non-default patterns |
calendar anchor
- Weekly: CoinShares digital asset fund flows. Used as a positioning read rather than a price call.
- Monthly: Liquidity proxy check to avoid cancellation of weekly M2 series.
- Per release schedule: Federal Reserve H.6 Update (pin the reminder to the date shown on the H.6 page).
- Quarterly/Annual: CME Cryptocurrency Market Structure Overview with Notional Value, ADV, ADOI, LOIH Context.
Essay scorecard (example rubric)
- Institutional Rail: Displays “+ / 0 / -” based on whether multi-week flows match snapshots of stability or improvement in ETF AUM, always as of date.
- Macro: “+ / 0 / -” based on whether the liquidity proxy is properly updated with the release calendar it is following.
- Structure: “+ / 0 / -” based on CME participation indicators and stable benchmark dependence.
- Safe haven competition: ‘+/0/-‘ based on whether the stress regime resembles a pattern that the ECB describes as atypical for the US dollar and the Treasury.
chart speech bubble
- Long-term trends in IBIT net worth (points as of each day): Plot the two validated anchors (January 27 and January 28, 2026) and extend them with future daily points taken from the publisher’s page to visualize the persistence of the flow.
- CoinShares weekly flow with annotations: Weekly net flow bar graph. You’ll see the outflow week of January 12th and the inflow week of January 19th, as well as Friday’s reversal note.
- Macro cadence timeline: A simple timeline that marks each H.6 release date and flags weekly M2 discontinuations keeps liquidity checks tied to stable updates.
- Market piping diagram: A flow diagram linking BRR, CME settlement, and commodity NAV/iNAV inputs that illustrates why benchmark continuity is important for allocators.
Bull/Base/Bear Scenario Band: Using Forecasting Without Outsourcing Confidence
Scenario scopes work when they are associated with conditions. It will fail if treated as a single-pass prediction.
- Long term reference band (2030): ARK has a hypothetical bear/base/bull target of approximately $300,000, $710,000and $1.5 million Per BTC, it is structured around TAM and penetration assumptions rather than single-path predictions. See the agency’s forecast snapshot for related internal commentary.
- Assignment conditional scenario: MarketWatch reported that Larry Fink discussed: $500,000-$700,000 The BTC scenario is that the institution is approx. 2%～5%. For internal context on the same theme, see Conditional Frames by Larry Fink.
- Near future reference bands (2026): According to MarketWatch, citing Citi analysts, $143,000 base, Over $189,000 with a bull Approximately $78,500 Bear.
A practical way to use these ranges is to map each to seven drivers. A bull run typically requires sustained institutional inflows through ETF rails and weekly flow regimes.
We also need liquidity conditions that do not constrain BTC positioning, with a market structure that keeps hedges and benchmark inputs stable. The bearish trend coincides with repeated outflow weeks associated with rate cut repricing.
A bearish path could also coincide with a stress regime in which safe-haven competition shifts portfolio hedging back to sovereign markets, which the ECB discusses in its safe-haven analysis.
Leaders integrating position sizing heuristics into these cases can cross-reference previous applicability of portfolio allocation rules and platform constraints as a behavioral overlay of measurable inputs.
Common paper mistakes, plus red flags and invalidation triggers
Common mistakes (process failures)
- Citing ETF AUM without a “current” date, even though the date stamp value is published on the issuer’s page.
- Despite CoinShares documenting macro price repricing and rapid reversals related to geopolitics, we treat the weekly flow print as durable.
- Build your liquidity dashboard based on the obsolete weekly M2 series, eliminating the need to use stable updated series such as the Monthly Seasonally Adjusted Series (M2SL) referenced by FRED.
- Use scenario language as a prediction, even when the cited material is conditional or based on assumptions.
Red flags and disables (preset triggers)
- CoinShares style Net outflow over several weeks This is combined with a sustained narrative of diminishing short-term cuts, consistent with the January 12 framework.
- CoinShares-like “reversal day” pattern repeats where risk events dominate weekly flows $378 million The Jan. 19 report notes Friday’s reversal.
- A set of broken macros in the dashboard. FRED’s obsolete weekly M2 notifications are designed to prevent this.
- Conditions worsen for regulated market participating agents following CME report 3 trillion dollars Hypothetical virtual currency derivative activity and its records in 2025 1,039 Large open interest holders on October 21, 2025.
- A persistent correlation regime where stress does not result in default USD and Treasury hedging behavior is consistent with the ECB’s safe-flight argument and the caution held by euro area investors. 800 billion euros Total U.S. government debt as of the second quarter of 2025.
Action checklists, monitoring routines, and reference materials
Action checklist/monitoring routine
- Create a one-paragraph BTC thesis that includes a “change of pace” term associated with the ETF AUM snapshot, weekly flows, and macro release calendar.
- Build a dashboard with a weekly CoinShares flow log that records IBIT net worth with date and cited drivers for the week.
- Tie macro checks to H.6 release timing and document liquidity proxies to ensure updates are not silently stopped as warned in FRED’s weekly M2 discontinuation notice.
- Quarterly review market structure using CME participating proxies and verify benchmark dependencies through BRR documentation.
- Track network security inputs separately from market plumbing and flows using a consistent hash rate source.
- We rescore papers monthly and after major stress events, using the ECB’s safe haven framework as a template for what to look for in intermarket hedging actions.
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