Bitcoin Update: Consolidation, LTHs Buying, Global M2 Rising, & Gold's Signal
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Cliff-Notes:
- Bitcoin’s consolidation isn’t manipulation—it’s just long-term holders taking profits into strength, distributing to new entrants, and setting up for the next leg higher, as they’ve done in every cycle.
- Stablecoins have become a major structural buyer of US Treasuries, currently holding ~$200 billion and filling the gap left by China and other divesting foreign holders, reinforcing demand for the dollar.
- With global M2 inflecting higher, gold leading price action, and Trump’s Strategic Bitcoin Reserve review on the horizon as a potential catalyst, bitcoin is primed for its next leg higher.
Check out today's Theya Research post in video form 👇
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One of the hot-button topics floating around on X of late has been bitcoin's price being artificially suppressed and leading to the boring period of consolidation we're in now. Let's put this rumor to bed with simple, observable on-chain behavior.
Bitcoin’s price action is playing out exactly as it has for the duration of this cycle: a choppy, stairstepping trend, with new higher highs made after several weeks or months' worth of consolidation. The present 100-day period of consolidation is simply an extension of this dynamic. Long-term holders (LTHs) are selling into strength, distributing supply to new entrants, just as they’ve done in every bull cycle, including this one.
This is normal. Those who held for years start offloading as price moves higher, transferring coins to new buyers stepping in to bid the price to even higher highs. It’s not manipulation. As capital cycles in and out of bitcoin, LTHs take profits while new entrants frantically establish positions.
LTHs accumulated BTC from $15k to $25k, before selling to new market entrants (short-term holders) who bid the price up to the next "step". They did the same from $25k to $40k, from $40k to $65k, and from $65k to the ~$95,000 range we find ourselves in now. I've labeled these 4 major instances of price movement following long-term holder distribution on the chart below:
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Importantly, LTHs are now net accumulators again, albeit slightly. Note the inflection point that occurred roughly one week ago. That shift has marked the late stages of consolidation before the next expansion phase; though the length of time between this inflection in LTH supply and bitcoin's price is too variable to be a price predictor:
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Claims of artificial price suppression is a gold-era argument that doesn't work in bitcoin, whose ledger is auditable in real time, meaning we can see exactly who is buying and selling through their own node on the network. If there were some coordinated effort to hold down the price, it would show up on-chain. Instead, what’s visible is the same cycle we’ve seen before: patient holders selling into price appreciation, a redistribution to new market participants, and the gradual tightening of supply that ultimately forces the next move higher.
Bitcoin is the only global asset where anyone can verify market dynamics at any time. No shadow balance sheets, no hidden liquidity injections, just a clear record of transactions. And right now, the data suggests this is just another cyclical pattern of profit-taking by long-term holders; one that could very well be weeks away from resolving and ascending higher.
Shifting gears to price action, bitcoin finds itself in a falling wedge—one that is much smaller than the descending consolidation channel it found itself in last summer. It has made two attempts at breaking out of it; once at the start of the month, and once earlier today—which it likely would have, had it not been for a Bybit hack of $1.4B Ethereum that sent the entire market into a tailspin. Mind you, this is the largest hack in "crypto" history, and bitcoin is only down 1.75% on the day—a testament to its outright strength and waning correlations with everything else. This wedge looks to resolve itself by the first week of March, at the very latest:
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Bitcoin has been consolidating in the ~$95k zone for 101 days now, roughly half of the length of time it spent consolidating last summer. The trend that would cause maximum pain in the market is for the present consolidation to extend to and beyond 236 days, the length of last summer's consolidation, which it very well could do given bitcoin is a gargantuan $2 trillion asset now. President Trump's working group is set to determine the viability of a Strategic Bitcoin Reserve before the end of June at the very latest. Its findings will likely be the next major catalyst for bitcoin, whether they finalize them at the deadline or well before it:
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Spot bitcoin ETF flows have diminished significantly since early January. Now logging in 7 and 8-figure inflows on a daily basis, and sometimes veering into net outflows—a far cry from the 9 and sometimes 10-figure inflows of last Spring and Fall. In and of themselves, spot bitcoin ETF inflows are far too weak to drive bitcoin's spot price higher:
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Back in January, bitcoin severely dislocated from its uncanny 10-week lagged correlation to global M2 that it held for 18 months. While global M2 indicated bitcoin was set to fall, the correlation broke down and bitcoin managed to hold the ~$95,000 area. Now, as global M2 is inflecting higher thanks to a weakening US dollar, bitcoin may very well be poised to make its next leg higher:
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Additionally, when we juxtapose bitcoin against gold with a 50-day lead, we can see that the two are similarly correlated, albeit more loosely than the global M2 connection. If the trajectory of gold is any indication, as it has been since September of 2023, then bitcoin may finally be poised to break out of its latest choppy consolidation range and gun for the $120,000 mark:
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And finally, let's take a look at stablecoins among the world's largest foreign holders of US Treasuries. China’s holdings of US Treasuries just hit their lowest level since 2009 at $759 billion, continuing a long-term trend of divestment. The offloading isn’t happening all at once—China has been steadily reducing its exposure since 2011, shifting reserves into gold and hiding its true holdings by moving assets to Euroclear, Clearstream, and other intermediaries. But the message is clear: Beijing wants less exposure to US debt. As soon as China began earnestly reducing its US Treasury holdings in 2014, it began stockpiling its gold reserves, now sitting at $192.8 billion relative to its still-large $759 billion in USTs:
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It’s not just China. Russia has fully exited USTs. Japan, the largest foreign holder, has been sitting flat at $1.06 trillion for 13 years. That leaves a scattered group of net accumulators—the UK, Luxembourg, Canada, Belgium, and hedge funds running the basis trade—taking on the slack. And yet, US borrowing needs have never been greater, with the Fed reducing its balance sheet and deficits widening:
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This foreign divestment has led the Fed to absorb a growing share of outstanding marketable US Treasuries. Its holdings have surged from 22% in 2008 to 47.3% in 2025, more than doubling as foreign demand waned:
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Despite the Fed’s growing share of US sovereign debt, foreign holdings of US Treasuries have continued to rise steadily over the past 25 years, now totaling $8.513 trillion:
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This is where stablecoins come in. Stablecoin issuers now hold ~$200 billion in US Treasuries, a number that will keep climbing as adoption grows. Unlike foreign governments, which buy USTs as part of trade policy or geopolitical hedging, stablecoins accumulate them as a direct consequence of the rising demand for digital dollars necessitating a risk-free reserve asset to back them:
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That’s what makes them so important to US debt markets. The Federal Reserve has historically been the backstop when foreign buyers pulled away. Today, stablecoins are increasingly stepping into that role, acting as a new structural bid for Treasuries that helps maintain liquidity.
White House AI & Crypto Czar David Sacks said that stablecoin demand could lower long-term interest rates. He's right. The proliferation of stablecoins and their use of Treasuries as a reserve asset means they’re functioning like an entirely new foreign central bank: absorbing UST supply and reducing the burden on the Fed, thereby allowing the US to meet its funding needs and preventing yields along the US Treasury curve from rising due to a lack of demand. Rather than a weakening of US dollar dominance, this is its evolution.
The shift away from China and Japan doesn’t spell trouble for Treasuries. The buyers are just changing. Stablecoins, designed to track the dollar, are reinforcing demand for US debt at the base layer of digital payments. The more they grow, the more USTs they have to hold. And just like that, the US has a brand-new class of demand keeping the system running.
Take it easy,
Joe Consorti
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Theya is the simplest way to take full control of your bitcoin. With our flexible multi-sig vaults, you decide how to secure your keys.
Whether you prefer keeping all keys offline, shared custody with trusted contacts, or robust mobile vaults across multiple devices, it's always Your Keys, Your Bitcoin.