Why Smart Money Is Still Accumulating Bitcoin Despite Market Volatility

Bitcoin has painted a volatile picture throughout 2025. After surging to an all-time high of $126,080 in October, the cryptocurrency experienced a sharp correction that erased over 25% of its value. As of mid-December, BTC trades around $88,240, reflecting the recent pullback. Yet beneath the surface turbulence lies a compelling case for continued accumulation, particularly given the macroeconomic backdrop shaped by current U.S. administration policies.

The narrative shift started when Washington signaled a fundamental change in its relationship with cryptocurrency. In March 2025, an executive order established a Strategic Bitcoin Reserve paired with a U.S. Digital Asset Stockpile — marking a watershed moment for institutional crypto adoption.

Government as a Permanent Holder: The Reserve Asset Play

The most significant policy development is the government’s transformation from net seller to permanent holder of approximately 200,000 Bitcoin. According to Greg Monaco, a CPA and founder of Monaco CPA, this strategic pivot fundamentally alters supply dynamics. “The government is now capitalized and acting as a reserve holder through the Treasury Department,” Monaco explained, underscoring the shift in how the asset is perceived at the state level.

Complementing this is the Bitcoin for America Act, championed by Rep. Warren Davidson. Should it pass, Americans could settle federal tax liabilities in Bitcoin, with all payments flowing into the Strategic Bitcoin Reserve. The proposal aims to acquire up to 1 million BTC over five years — roughly 5% of the total circulating supply. This isn’t theoretical; private institutional capital is already front-running this sovereign demand signal.

Regulatory Clarity Paves the Way for Institutional Participation

A second pillar supporting the bull case emerged through regulatory evolution. In January 2025, the SEC published Staff Accounting Bulletin 122, which reshaped how financial institutions must report cryptocurrency holdings. This superseded SAB 121, the 2022 directive that had discouraged banks from holding crypto assets on their balance sheets.

The practical impact is immediate: major financial institutions can now operate crypto custody services with clear accounting frameworks. The SEC’s Project Crypto initiative simultaneously dismissed dozens of outdated enforcement actions, signaling a reset in the regulatory posture.

“The repeal of SAB 121 removes institutional friction,” Monaco noted. “This opens doors for traditional finance to enter the space with confidence, which translates to fresh capital inflows and potentially higher BTC prices.”

Global Contagion Effect: When One Nation Moves, Others Follow

Nic Puckrin, former Goldman Sachs credit analyst and co-founder of Coin Bureau, points to another tailwind: international spillover. “The Trump administration has positioned Bitcoin and crypto as strategically vital to U.S. global competitiveness,” Puckrin told reporters. “This positioning incentivizes other nations to develop similar reserve strategies in 2026.”

The geopolitical angle matters more than it appears on the surface. When superpowers treat Bitcoin as a reserve asset, competing nations face pressure to build their own reserves to maintain balance. This demand cascade could sustain BTC price momentum well beyond 2025.

On-Chain Behavior Reveals Patient Capital Accumulation

Perhaps the most bullish signal comes from analyzing who actually holds Bitcoin. On-chain metrics reveal that 63% of the total Bitcoin supply hasn’t moved in over 12 months. Extending the window: 45% of all BTC remains dormant for three years or longer.

This isn’t speculative trading behavior — it’s ideological accumulation. These holders view Bitcoin as a hedge against institutional monetary systems and government debasement. During market downturns, this cohort’s resolve creates a persistent price floor. Unlike traders who panic-sell, these accumulators remain steadfast, providing structural support to Bitcoin’s valuation during corrections like the current one.

Monaco frames it succinctly: “These are ideological accumulators, not day traders. Their conviction creates resilience in the asset’s value over extended periods.”

The Bigger Picture: BTC.D Stability Amid Broader Crypto Churn

While Bitcoin’s dominance (BTC.D) has fluctuated with altcoin market activity, the underlying thesis remains intact. The four pillars — strategic reserves, regulatory clarity, geopolitical positioning, and patient accumulation — collectively create an environment where Bitcoin benefits from both top-down policy support and bottom-up investor conviction.

The path forward isn’t a straight line to $200,000 as some optimists predicted earlier in 2025. Instead, expect a grinding accumulation phase punctuated by volatility, where each policy announcement and regulatory clarity adds incremental conviction to the bull thesis. Smart money isn’t timing the bottom — it’s positioning for the inevitable structural shift toward Bitcoin becoming a recognized reserve asset on national balance sheets.