Here's Why Bitcoin's Best Days May Still Be Ahead

Key Points

• Bitcoin often rises when liquidity climbs, yields drop, and the dollar weakens.

• Those three things are happening right now.

• XRP and Ethereum are likely to benefit as well.

• 10 stocks we like better than Bitcoin ›

In large part, Bitcoin (CRYPTO: BTC) dances to three simple beats: The amount of money sloshing around the financial system, the strength of the dollar, and the direction of U.S. Treasury bill and bond yields. When global liquidity expands, the dollar's value drifts lower, and yields ease, the coin has, historically, found plenty of room to run -- and it hasn't tended to give up all of the gains once the tailwinds peter out.

And for the moment, all three of those trends are starting to point in the right direction for upside and toward the idea that Bitcoin's best days might be ahead of it. So let's investigate what that means for Bitcoin, as well as the expected knock-on effects for other major cryptocurrencies like XRP (CRYPTO: XRP) and Ethereum (CRYPTO: ETH).

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This is as simple as global macro investing ever gets

First, let's look at global liquidity, which you can think of as the amount of money that is moving around the world's financial systems on a regular basis, as well as the speed at which that money moves.

Cross-border bank credit expanded by roughly $1.5 trillion in the first quarter of 2025, reaching a record sum of nearly $34.7 trillion, with growth strongest among non‑bank financial institutions. That is a clear sign that global credit is flowing more freely again compared to a couple of years ago. Furthermore, Bitcoin's tendency is to rise when broad money and other global liquidity gauges expand, as more liquidity typically means that investors on average have more capital with which to seek a yield from assets that are riskier than average.

The strength of the dollar is the second bullish tailwind in play. A softer U.S. dollar index (DXY) removes a headwind for dollar‑quoted assets, and the greenback has been losing altitude as markets price in easier monetary policy from the Federal Reserve. In late August and early September, the DXY slipped to its weakest level since late July as rate‑cut odds increased. Recent Bitcoin surges have tracked softer‑dollar episodes, reinforcing the linkage.

The third factor is yields. Falling U.S. Treasury yields means that safe investments are less attractive, which in turn supports a capital rotation toward assets that still deliver a decent return, albeit at a higher risk. Markets have leaned into that view on the back of cooler labor data and signs of more dovish monetary policy, pushing U.S. stocks to records and nudging yields lower as investors anticipate Fed rate cuts.

When the cost of capital decline, capital tends to migrate toward scarce assets and growth narratives. Bitcoin sits at the intersection of both.

Put together, the macro picture for Bitcoin right now is highly bullish. Similar constellations have preceded strong 12‑month windows for Bitcoin performance. And this time around, financial institutions are eager to buy up as much of the coin as they can get their hands on to back their Bitcoin exchange-traded funds (ETFs) and get direct exposure, so the odds are good that future returns will be strong.

What this setup implies

Assuming that liquidity keeps improving, the dollar stays soft rather than surging, and the Fed follows through on policy easing, there is a chance that Bitcoin's next 12 months resemble prior liquidity upswings that delivered triple‑digit percentage gains. Don't bet your house on that happening, but be aware that it's possible.

This same set of conditions will likely also benefit other cryptocurrencies.

Ethereum's newly live spot ETFs in the U.S. have already amassed sizable assets and steady inflows. In July and August, spot Ethereum ETFs posted record monthly and single‑day inflows as large asset managers scaled up their allocations. Improved macro conditions plus a ready‑made ETF on‑ramp are a powerful combination for Ethereum in a rising‑liquidity scenario.

XRP's catalyst path is slightly different, but potentially complementary.

Whereas Ethereum already has U.S. spot ETFs, additional crypto ETFs are pending approval by the Securities and Exchange Commission (SEC), potentially as soon as October, with XRP among the candidates. While the timing is uncertain, the directional policy backdrop has shifted toward broader ETF availability beyond Bitcoin and Ethereum, which would give institutions a clean way to allocate to XRP in size, if and when approval is granted. That would make an improving macro tide even more meaningful for the asset.

The bottom line here is that when liquidity is rising, the dollar is softening, and yields are easing, Bitcoin's long‑term investment thesis gets bolstered by tailwinds rather than buffeted by the headwinds of uncertainty that typically accompany major changes to the macro environment.

If that alignment persists through the next few quarters, Bitcoin's best days may indeed still be ahead, with Ethereum and XRP poised to benefit from the same macro tide.

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Alex Carchidi has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy.