How to Increase Bitcoin Holdings During America's Changing Monetary System

In the past year and a half, the market has proven how to increase profits from Bitcoin amid drastic changes in monetary policy. This shift began in 2024, when the Trump administration started rewriting Federal Reserve policies and the role of the monetary system in the economy. Our understanding of these changes is crucial not only for investing but also for navigating the new financial landscape that has emerged since then.

The strategy of major investors in building Bitcoin positions

The real challenge for large institutional investors occurred in 2024, when the market reflected doubts about the future of the financial system. However, leading figures like Michael Saylor of MicroStrategy and Tom Lee of FundMine showed remarkable determination.

In October 2024, as the market was on the verge of collapse, MicroStrategy added over $963 million worth of Bitcoin—specifically, 10,624 BTC—to their holdings. This was their largest single acquisition in months. This move was even more impressive because it happened during a time when some speculated that the company might be forced to sell to maintain financial stability. Instead, they took the opposite approach—continuing to buy.

A similar move in the ETH (Ethereum) ecosystem is equally significant. Despite a 60% drop in their market cap, BitMine still found ways to raise cash through ATM mechanisms and continue investing. In the last quarter of 2024, their Ethereum holdings reached $429 million in purchases, bringing total holdings to $12 billion. This pattern offers an important lesson: in volatile markets, investors with long-term conviction and access to capital can capitalize on temporary pullbacks.

This dynamic is not just about individual moves. CoinDesk analyst James Van Straten commented that MSTR secured $1 billion in funding within just one week—a rapid acceleration compared to 2020, when it took four months to achieve the same figure. In the context of market cap dynamics, Tom Lee’s move in Ethereum also had a proportionate impact, considering Bitcoin’s market cap is five times larger than Ethereum’s.

Understanding ETF outflows: Arbitrage unwinding, not panic selling

The biggest misconception of 2024 is the interpretation of Bitcoin ETF outflows. At first glance, the nearly $4 billion exit from Bitcoin ETF funds, along with the price movement from $125,000 to $80,000, seemed to indicate a classic institutional retreat. But deeper analysis from Amberdata tells a different story.

Most of the outflows did not come from panic-selling investors but from “forced closure of leveraged arbitrage positions.” This classic arbitrage strategy—known as “basis trade”—profits from buying spot Bitcoin while simultaneously selling futures contracts, earning from a stable spread. This mechanism operated successfully until October 2024, when the annualized basis dropped from 6.63% to 4.46%, resulting in 93% of trading days being below the break-even point.

Data speaks for itself: open interest in Bitcoin perpetual contracts fell by 37.7% over the same period, with a total reduction of $4.2 billion. The correlation coefficient between basis change and open interest movement reached 0.878—almost perfect synchronization. This is not a sign of market panic but of systematic, professional trade unwinding.

More importantly, major allocation-focused institutions like BlackRock and Fidelity continued to receive inflows even during the worst net outflow periods. Fidelity’s Bitcoin fund remained positive throughout, and BlackRock’s iBit still attracted new funds. This indicates that institutional interest in long-term Bitcoin accumulation remains strong.

After the liquidation of arbitrage funds, the overall market structure became healthier. Bitcoin ETF holdings stabilized at 1.43 million BTC, mostly from long-term allocators rather than short-term hedged positions. The removal of leverage reduced structural volatility and paved the way for a cleaner price discovery process.

How the Federal Reserve and Treasury are changing the game in money markets

A deeper narrative enters the realm of macroeconomic restructuring. Over past decades, Federal Reserve independence was considered an institutional cornerstone—the fundamental principle that monetary policy is under the central bank’s control, not political powers. But the 2024-2025 period marks a significant shift in power dynamics.

The Trump administration aggressively took control of the monetary system through strategic personnel placements and policy redirection. Key figures—Kevin Hassett, James Bessent, Kevin Warsh, among others—are not traditional central bank advocates. Their collective vision appears aimed at reducing the Federal Reserve’s monopoly over interest rate setting, long-term funding costs, and system liquidity, restoring more monetary power to the Treasury.

The first visual signal was the rise in the term premium spread. The 12-month and 10-year Treasury spreads began increasing—not due to economic growth expectations or inflation concerns, but because the market reassessed a fundamental assumption: that long-term interest rates are no longer solely controlled by the Federal Reserve but are increasingly influenced by Treasury fiscal actions.

The SOFR (Secured Overnight Financing Rate), the overnight repo rate in the US money market, dropped dramatically in September 2024, signaling rapid tightening of the money supply and a clear policy shift by the Federal Reserve. This reorientation implies that the entire framework for pricing risk assets is being rewritten.

The strategy is more sophisticated than simply “shrinking the balance sheet.” The Trump team questioned the “ample reserves system”—where the Federal Reserve expands its balance sheet to provide reserves to banks. They recognize that the current system is too tight, requiring a larger balance sheet to maintain stability. Messaging around this contradiction is used to challenge the Federal Reserve’s institutional framework and shift authority back to the Treasury.

The result is a major reorganization of how yields are determined, with fiscal tools gradually becoming more dominant than traditional monetary policy levers. For crypto markets, this nuanced shift means that liquidity improvements from fiscal expansion support Bitcoin’s pricing, but longer-term adjustments to the new monetary framework will require additional accumulation periods as the system expands.

The future of Bitcoin in a fiscal-dominated era

The transition from a “central bank-dominated monetary era” to a “fiscal-dominated era” is not just a technical change. It is a fundamental restructuring of how risk assets are priced and where liquidity originates in the financial system.

In this new paradigm, markets will likely become more volatile as new pricing mechanisms are built, but the foundation for a healthier long-term structure is being laid. MicroStrategy and BitMine’s strategies—continuous accumulation even during pullbacks—reflect the recognition that Bitcoin, as a non-fiat asset, holds a unique position in the emerging financial order.

For investors interested in how to grow their Bitcoin holdings in this context, the key insight is simple: capitalized institutions with conviction can leverage temporary volatility as an opportunity. The transition period is challenging, but those committed to the long-term thesis will emerge in a stronger position. As the monetary landscape evolves toward 2026, Bitcoin remains at the strategic intersection of multiple structural trends—financial system reform, liquidity shifts, and institutional adoption patterns—that continue shaping the new financial future.