Bitcoin’s value proposition is coming into sharper focus amid a rapid expansion in global money supply and persistent government deficits.

While recent price drops have pushed the Bitcoin Fear & Greed Index into extreme fear, analysts emphasize that the core long-term thesis for Bitcoin remains unchanged.

Macro environment drives bitcoin narrative

Macro analyst James Lavish underscored the broader context, stating:

“Governments will keep overspending, global liquidity will keep expanding, and long-term, Bitcoin will reflect inflation that continues ad infinitum.”

This sentiment is echoed by the steady rise in deficits and stimulus.

The United States reported a budget deficit of $1.775 trillion for fiscal 2025, with government spending reaching $7.01 trillion.

President Trump’s continued proposals for direct stimulus illustrate how elevated spending is now a structural fixture of fiscal policy.

Global liquidity at record highs

The broad money supply reached $142 trillion in September 2025, marking a 446% increase since 2000.

Annual growth now stands at 7%, with a 9.1% spike so far this year.

China’s circulating money totals $47.1 trillion, and the US follows at $22.2 trillion.

Central banks across developed economies have continued to inject liquidity.

Institutional adoption continues

Despite volatility, institutional investors are increasing exposure.

Harvard University, for example, expanded its Bitcoin ETF holdings by 257% in Q3 2025, making the IBIT ETF its largest allocation at $443 million. This signals rising conviction in Bitcoin’s long-term role.

Bitcoin as an inflation hedge

Analyst Scott Melker summarized the conviction among long-term holders:

“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.”