Is Now the Time to Buy Bitcoin?

Journal of Financial Planning: December 2025

Ivory Johnson, CFP^®, ChFC, is the founder of Delancey Wealth Management, LLC (www.delanceywealth.com). Mr. Johnson has a B.S. in finance from Penn State University, has been certified by the Digital Asset Council for Financial Professionals, and is a member of the CNBC Financial Advisor Council.

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Adam Smith famously said, “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Smith was not so much an economist as he was a philosopher, having never used the word “capitalism” and being more prone to political science than the free-market structure that supports it.

Putting semantics aside, Uncle Sam’s debt has surpassed $38 trillion¹ with the ease of a summer breeze gathering flowers. In doing so, the United States now spends more money on the interest payments of these obligations than it does on Medicaid, food stamps, and Social Security Disability (SSI) combined.² One would be called an alarmist to define America’s fiscal circumstance as a debt spiral, where increasing interest payments force borrowers to take on more debt to cover expenses and interest, but this unsightly characterization can be found in any reputable dictionary.

Illusions of Money and Wealth

Fortunately for investors, wealth never disappears, it just shifts, and our regard for our own interest leads us to all sorts of places we never thought we’d find ourselves in. A loaf of bread, for instance, might cost a single ice cube on Monday, but demands two ice cubes by Friday. The bread does not taste any better, the ice cubes have just melted, which explains what happens when the money supply grows by 152 percent in a span of just over 15 years.³

Along those same lines, the S&P 500 denominated in dollars has increased by 98 percent over the last five years but has declined by 85 percent when it is priced in bitcoin.⁴ Those of us who own financial assets, or bread, have twice as many ice cubes as the value has doubled, albeit in diminishing monetary units. The folks who live check to check and spend all their ice cubes as they earn them can only afford half as much bread. Bitcoin doesn’t melt because it has an algorithmically enforced cap of 21 million coins. The question before us, therefore, is how fast we should expect these ice cubes to melt and correspondingly increase the price of bitcoin. Or said another way, is it too late to get in?

It’s been said that God protects young people and fools, but there is no known exception for investors who attempt to time the market. This would suggest that day traders, technical analyzers, and moving-average mind readers are not quite helpless enough to receive divine safeguards. Timing the price movement of bitcoin, or any other vehicle for that matter, is not recommended. Instead, it helps to identify a repeatable process that increases the odds of a potential outcome.

The word is out that bitcoin is heavily correlated to the growth of the global money supply. In fact, crypto, Wall Street, and Madison Avenue walked into a bar and came up with the phrase “debasement trade”⁵ to advertise which instruments benefit from the melting of ice cubes. Knowing the relationship that exists between deficit spending and the liquidity required to service the debt, it’s probably worth our time to explore which facilities the Federal Reserve might use to keep this smoke and mirror show on tour.

The Fed’s Financial Arsenal

The United States must refinance 31 percent of U.S. publicly held debt over the next 12 months⁶ because Treasury officials borrowed on the short end of the curve. The way Treasury bills are funded is that an institution buys the T-bills, avoids tying up its cash by selling those bills to a cash lender like a money market fund with a repo agreement, and agrees to purchase them the next day plus the repo interest rate. As a result, the T-bills are funded with short-term repo borrowing instead of long-term capital that allows them to hold larger positions with limited capital.

The reverse repo market is where the Federal Reserve borrows overnight cash from money market funds and provides Treasuries as collateral. In essence, it sells Treasuries overnight and buys them back the next day, which soaks up cash from the system temporarily. This is another lever that allows the central bank to soak up excess liquidity and help it maintain control of the Fed funds rate. When the reverse repo balances are high, there’s excess cash in the system because money funds have parked cash at the Fed that isn’t circulating.

When the reverse repo market falls, it indicates that the cash lenders are finding better yields elsewhere, and liquidity is shifting into the private system. If the balance hits zero, it shows that there is no more spare cash, and all liquidity has been deployed. A catalyst for the increase in liquidity, therefore, would be a central bank that replenishes the reverse repo market to absorb the scheduled onslaught of refinancing; not for easing or a change in monetary policy, but to keep the plumbing in good order as it has done in the past.⁷ As I write this article in October, the reverse repo balance declined from $2.5 trillion to $20 billion⁸ with a wall of debt and deficit demands coming due.

The mechanical flow of money plays an outsized role in today’s financial markets, and if you haven’t noticed, it’s complicated. In addition to the repo market, there is also a Treasury General Account (TGA), which is the U.S. Treasury’s checking account held at the Fed. When you pay taxes, the money flows in, the TGA increases, cash moves from private banks to the TGA, and it drains liquidity. When it spends money, the money flows out, and the opposite is true as liquidity increases. Once the government shutdown ends, agencies will restart payments for contracts, wages, and benefits, which would cause the TGA to fall and could potentially serve as a liquidity injection. Should the Treasury issue more debt than it redeems as expected, investors will buy with cash from the banks and money funds, which would drain liquidity unless the Fed injects liquidity through the repo market.

Macro Factors for Bitcoin Moves

This is not to say that macroeconomic conditions have no impact on bitcoin. The ISM Manufacturing Index measures the relative strength of the manufacturing sector and can suggest economic expansion, increasing demand, and loosening financial conditions as it rises. An ISM of 50 represents no change from the previous month, above 50 indicates expansion and below 50 is a contraction. The theory holds that when business cycles are strong and liquidity is abundant, risk assets tend to outperform. This is noteworthy for bitcoin because historically the digital asset has outperformed most risk assets in these conditions given the store of value, or ice cube argument.

Regarding our discussion here, the ISM is currently reversing higher, having increased in each of the past three months, and if one were to look at a chart of the ISM and bitcoin, they would see an obvious correlation between the two data points. Nobody can say for certain if the correlation will remain or if the ISM will continue its ascent; this is simply an attempt to gauge the odds that something will or will not happen with another valuable piece of information.

Another catalyst in this discussion is the direction of government spending that would give officials an incentive to pull the levers of liquidity. It’s not just the direction of the spending that matters, but the rate at which it accelerates. For context, the United States spends roughly $7.1 trillion a year. First you have $1.3 trillion that gets means tested and includes Medicaid, the earned income tax credit, student loans, food stamps, housing assistance, and other safety net programs to help the needy who have limited political influence. There is another $3.2 trillion that accounts for Social Security, Medicare, and pensions for government workers and retired military personnel who would burn Washington to the ground if these benefits ever got cut.

The remaining $2.6 trillion includes defense and non-defense discretionary spending. This is where you find the government contracts, the subsidies, the tax loopholes—the rich people stuff. Without debating who has lobbyists and who does not, take my word for it when I say that the rich people stuff isn’t going anywhere, the entitlement spending is the third rail of politics, and you can’t cut enough of the poor people stuff to make up the difference. For what it’s worth, this is before Congress cut taxes in July and increased the projected debt by another $4 trillion.⁹

In that sense, there seems to be a fiscal inevitability to where we’re headed. The budget deficit will force us to borrow an increasing amount of money, and foreigners, who are no longer subsidizing Uncle Sam’s largesse at the same scale as they once did, creates an expanding gap in funding.¹⁰ This means the Fed will likely manufacture more and more money, one way or another, in ways that few of us understand, to buy more of our own debt, which increases liquidity at a faster pace.

This would be a good time to remind investors that the Treasury General Account could increase with additional tax receipts that result from a peaking business cycle, which would drain liquidity. Moreover, the resurgent spending once the shutdown ends is temporary, and there is no guarantee that the Fed will inject liquidity into the repo market just because they did it before.

The GENIUS Act of 2025 also established the federal framework for digital assets pegged to a fixed number of monetary units known as stablecoins.¹¹ These instruments must hold reserves in U.S. dollars or short-dated Treasuries to back the coin and create a regulatory path. As stablecoins increase in supply, so too will the demand for Treasuries, or so the U.S. Treasury hopes, which would suppress interest rates and bolster the dollar as the preeminent reserve currency.

Uncertain Solution in Stablecoins

Killing a flock of birds with a single stone sounds great in principle, but it complicates a system of managing interest rates and liquidity already clouded by obscurity. In the event that stablecoins become engaged in more transactions, there’s a potential for large redemptions that lead to liquidity strains in the Treasury market, money market, and perhaps even global markets. Furthermore, the displacement of bank reserves could affect broader credit and liquidity conditions.

On one hand, stablecoins may increase liquidity and expand payment access. On the other, they may concentrate safe assets into fewer hands that create new kinds of risks in the form of institutional deposit bases and funding channels for households and businesses. Creating new demand for our debt sounds great, but then again, if you want to make God laugh, make plans.

Uncle Sam is a winded bull in a fiscal china shop, his hand searching desperately for a rabbit in the hat he just borrowed with some central banking mechanism that keeps breaking our purchasing power. Bitcoin is scarce; there will only be 21 million coins available, and unlike your ice cubes, they won’t ever melt. At the same time, the labyrinth of facilities and unintended outcomes could stabilize the erosion. We’re just trying to figure out how fast the plates, the bowls, and the cups come crashing down. That’s the point of this exercise—to make it simple so we can make a better decision and solve for X: given the current state of things, do you believe liquidity will accelerate or will it subside? 

Endnotes

1. Cerullo, Megan. 2025, October 23. “U.S. Debt Tops $38 Trillion for the First Time, Worsened by Government Shutdown.” CBS News. www.cbsnews.com/news/us-debt-38-trillion-government-shutdown-2025/.
2. Haring, Jordan. 2025, October 28. “Sizing up Interest Payments on the National Debt.” AAF. www.americanactionforum.org/insight/sizing-up-interest-payments-on-the-national-debt.
3. McMaken, Ryan. 2025, April 12. “The Money Supply Keeps Growing as the Fed Backs off Monetary ‘Tightening.’” Mises Institute. https://mises.org/mises-wire/money-supply-keeps-growing-fed-backs-monetary-tightening.
4. Rosen, Phil. 2025, July 14. “Bitcoin Dominates the Stock Market but No One’s Paying Attention: 2 Charts.” Opening Bell Daily. www.openingbelldailynews.com/p/bitcoin-outlook-stock-market-investors-sp500-wall-street-btc-crypto-trump.
5. Escobar, Krysta. 2025, October 10. “Why Wall Street’s Old ‘Wall of Worry’ and New ‘Debasement Trade’ Are Boosting Gold, Bitcoin in Typically Volatile October.” CNBC. www.cnbc.com/2025/10/10/debasement-trade-gold-bitcoin-stock-market-risks.html.
6. United States Joint Economic Committee. n.d. “Debt Dashboard.” www.jec.senate.gov/public/index.cfm/republicans/debt-dashboard.
7. Cox, Jeff. 2020, March 12. “Fed to Pump in More Than $1 Trillion in Dramatic Ramping Up of Market Intervention amid Coronavirus Meltdown.” CNBC. www.cnbc.com/2020/03/12/fed-to-pump-more-than-500-billion-into-short-term-bank-funding-expand-types-of-security-purchases.html.
8. Federal Reserve Bank of New York. n.d. “Reverse Repo Operations.” www.newyorkfed.org/markets/desk-operations/reverse-repo.
9. Lett, Dominik. 2025, July 2. “The Senate’s Big Beautiful Blunder Could Increase the Debt by $6 Trillion.” Cato Institute. www.cato.org/blog/senates-big-beautiful-blunder-could-increase-debt-6-trillion.
10. Hoagland, G. William, Caleb Quakenbush, and Aaron Till. 2025, June 4. “Foreign Investors Hold a Shrinking Share of U.S. Debt.” Bipartisan Policy Center. https://bipartisanpolicy.org/blog/foreign-investors-hold-a-shrinking-share-of-u-s-debt/.
11. Liang, Nellie. 2025, October 21. “Stablecoins: Issues for Regulators as They Implement GENIUS Act.” Brookings Institution. www.brookings.edu/articles/stablecoins-issues-for-regulators-as-they-implement-genius-act/.

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The S&P 500 is an unmanaged index which cannot be invested into directly. This index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Bitcoin and other cryptocurrencies are a very speculative investment and involves a high degree of risk. Investors must have the financial ability, sophistication/experience, and willingness to bear the risks of an investment, and a potential total loss of their investment. Information provided here is for informational purposes only and is not intended to be, nor should it be construed or used as investment, tax, or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest in cryptocurrency. An investment in cryptocurrency is not suitable for all investors.