BTC Wealth Report – Issue 05

👋 Welcome to BTC Wealth — Issue 05

Bitcoin’s up 10% this week — but that’s not the real story.

What’s happening beneath the surface is far more important.

Earlier this year, global markets sold off during the tariff tantrum.
Bitcoin dropped too — but no more than the Nasdaq.

That’s a huge shift.

Drawdown risk has always been the go-to excuse for institutional investors to avoid Bitcoin.
But now? The asset is evolving — and it’s not random.

There is a structural change in how Bitcoin trades.
And this week, we’re breaking down what’s behind it —

Here’s what we’re tracking:

• 💼 Institutional Diamond Hands — Speculators are being converted into holders

• 📉 Muted Drawdowns — BTC is tracking equities, not overreacting to them

• 🏗️ Structural Shifts — BlackRock and MSTR are building the new floor

• 📊 Flows & Fundamentals — ETFs keep accumulating

• 🏛️ The State Reserve Race - Some wins, and what to watch next

Let’s get into it.

🧱 MicroStrategy Is Reshaping Bitcoin’s Market Structure

Something fundamental has changed.

MicroStrategy (MSTR) and the growing wave of BTC Treasury companies are altering how speculative capital interacts with Bitcoin.

Here’s the new dynamic:

The result?

Speculative money goes in —
permanent Bitcoin holders come out.

This is a powerful shift in the mechanics of the market.

📉 In past cycles, speculative flows went straight into Bitcoin — and fled just as fast. That’s what fueled the brutal drawdowns.

Now, that same capital is flowing through vehicles like MSTR, where it’s converted into Bitcoin and locked up indefinitely.

The volatility is being absorbed by the BTC proxy.

Consider this year:

• Bitcoin peaked and then fell 33% - nasty, but not much worse than traditional markets

• MSTR drew down 54% over the same period

• Yet MSTR has also outperformed BTC, up 252% vs. 70% over the past year

💡 The volatility is moving, from the asset to the wrapper.

This is the new cycle:
Bitcoin is getting more stable — because the volatility is being offloaded to the instruments built on top of it.

💼 BlackRock Is Institutionalizing Bitcoin

If MicroStrategy is converting speculation into permanent holders — BlackRock is institutionalizing it.

The iShares Bitcoin Trust (IBIT) now holds 625,000 BTC.

Blackrock buying Bitcoin is bullish but it’s more than that — it’s a signal of structural change.

So far in 2025, BlackRock has bought 73,000 BTC. Even during Q1’s 33% drawdown, IBIT barely flinched — selling off just 16,000 BTC at the lows before inflows resumed.

In past cycles, drawdowns triggered mass panic.
Traders dumped. Institutions stayed out.

This time is different.

BlackRock gives allocators a regulated, tax-efficient, custody-managed way to buy Bitcoin — and they’re not panic selling.

This ETF isn’t just about access. It’s about absorbing volatility and locking up supply in a vehicle that doesn’t behave like retail.

🔒 The Institutional Era

Together, IBIT and MicroStrategy now hold more than 1.15 million BTC — nearly 6% of total supply.

They’re reshaping market behavior.

Downside risk is falling.

📊 ETF Tracker — BlackRock Buys, GBTC Bleeds, Others stalled

Another week, another dose of structural Bitcoin accumulation.

U.S. spot ETFs added 9,152 BTC — and once again, BlackRock did all the work.

🟢 Key Flows:

• BlackRock (IBIT): +10,415 BTC

• Grayscale (GBTC): –1,734 BTC

• Net Total: +9,152 BTC

Grayscale’s slow bleed continues. It was the story when ETFs launched — and it’s still playing out.

With a 1.5% fee, GBTC remains far more expensive than IBIT and Fidelity’s FBTC, which are capturing flows by offering the same exposure for less.

📉 GBTC Is Losing Ground

• Still generating far more fee revenue than any other ETF, however:

• Assets are shrinking

• It’s now the third largest ETF behind Blackrock and Fidelity’s funds

🏛️ The State Reserve Race — One Win, One to Watch, One Vote Away

The U.S. state-level Bitcoin Reserve movement gained serious momentum this week — with three key updates:

🥇 New Hampshire — First to Cross the Line

New Hampshire just made history.

On May 6, Governor Kelly Ayotte signed HB 302 into law — making it the first U.S. state to formally authorize a Strategic Bitcoin Reserve.

Here’s what it does:

• ✅ Allows up to 5% of state funds to be allocated to Bitcoin (or any digital asset with a market cap over $500B — currently only BTC)

• ✅ Permits investment via U.S.-regulated custodians or ETFs

• ✅ Goes into effect in 60 days

New Hampshire is now the benchmark.

🟠 Arizona — Awaiting a Decision

Arizona passed HB 2749, establishing a reserve fund for unclaimed digital assets (staking rewards, airdrops, etc.). Governor Hobbs signed that bill into law.

But the real story is SB 1373 — Arizona’s flagship Strategic Reserve bill.

• ✅ Passed the legislature

• 📬 Now sitting on Governor Hobbs’ desk

• ⏳ Awaiting either a signature or a veto

If signed, Arizona becomes the second state to deploy capital into Bitcoin via a formal reserve fund.

🐂 Texas — One Vote Away

Texas is on the brink of making a significant move.

Senate Bill 21 (SB 21), which proposes the creation of a Texas Strategic Bitcoin Reserve, has passed the Senate with a 25–5 vote and cleared the House Committee on Government Efficiency with a 9–4 vote. It now awaits a full House floor vote.

Key details:

• 🔒 The reserve would be managed by the Texas Comptroller of Public Accounts

• 💰 Investments limited to digital assets with a market cap over $500B — currently only Bitcoin qualifies

• 📈 The reserve would be funded through legislative appropriations, dedicated revenue, and donations

If approved, Texas could become a leader in state-level Bitcoin adoption.

🧠 Final Thoughts

From corporate treasuries to state reserves, Bitcoin is absorbing capital at every layer of the financial system.

The buyers are stronger.
The flows are stickier.
And the floor is rising.

That’s your BTC Wealth Report this week.

Thanks for reading.

- Thomas Fahrer