The best fireworks shows start with an ominous hush, when the crowd is quiet, the sky dark, and anticipation thick. Then, all at once, the night goes bright. Markets sometimes do the same thing.

After weeks of sideways chop, a sudden cluster of on-chain and macro signals can light the fuse under an asset, which is exactly where Bitcoin (BTC 1.11%) sits today. Five independent gauges of demand are all tilting bullish at once. Let’s analyze each one to see how they mesh with the long-term thesis for buying and holding this crypto.

These five green lights are on

First, money is pouring into Bitcoin through the exchange-traded fund (ETF) pipeline.

Digital-asset products just booked their 10th straight week of inflows, pulling more than $1.1 billion straight into Bitcoin portfolios. That is an acceleration from May’s already-robust pace, and pushes the flows this year so far to more than $15 billion, a new record. Fresh capital matters because every ETF issuer must go to the spot market to buy and take coins out of circulation.

The second breakout signal for Bitcoin is that the network itself is getting pricey. As an aside, most investors usually ignore this data entirely, and it usually contains some actionable information.

Daily fee revenue on the network popped to $78.9 million this week, the highest tally since March, and topping off more than a full month of fee revenue exceeding $50 million daily.

Bitcoin miners love rising fees because those fees fatten their margins and incentivize them to make more capital investments into mining hardware to keep the mining process going. Investors should love them too, because fees spike only when traffic is heavy. This means it’s a blunt sign that people are willing to pay up to get into the next block.

Image source: Getty Images.

The third bullish factor is that stablecoin supply is grinding higher again. The aggregate market cap of dollar-pegged stablecoins sits just above $251 billion, up 2.5% during the past 30 days.

While most investors don’t associate stablecoin volume with Bitcoin specifically, it’s undeniable that stablecoins are the dry powder of crypto. So when the pile is growing, at least some of the capital ends up chasing coins with the deepest liquidity to capture a yield, and Bitcoin is still the deepest pool in the crypto sector by far.

Fourth, global broad money supply is turning up after last year’s contraction. That’s important because the coin correlates more tightly with money supply growth than anything else. In other words, when the liquidity tide rises as a result of increases to the money supply, Bitcoin floats highest.

Finally, the altcoin market has woken up, and smart altcoin investors often rotate their profits back into Bitcoin rather than retaining highly volatile tokens. But before that, capital rotations into smaller tokens typically mark the middle innings of a bull run. It’s a sign that capital is growing confident and looking for leverage, like what’s happening right now.

Historically, once rotation begins, Bitcoin follows with a dominant move to reassert leadership, which is what could come next.

Remember that headwinds still exist here

The last two times all five of these gauges lined up, in October 2020 and January 2024, Bitcoin doubled within six months. That does not guarantee a repeat, even if it’s probably enough to enable investors to buy the coin with confidence right now.

Two clouds in particular could rain on the party.

The U.S. Federal Reserve may not cut interest rates as quickly as many investors are expecting, especially if tariff-driven inflation keeps consumer prices high. If rate-cut expectations get dashed again, liquidity growth could pause. That would imply doldrums for Bitcoin rather than a blastoff.

Meanwhile, Washington’s crypto rulebook is still in the process of being written by the week, and considerable uncertainty remains regarding what the final set of regulators for the sector will be. Stablecoin oversight is advancing, but fresh requirements could slow supply growth if issuers need new licenses or capital buffers to play ball.

Positioning for a potential breakout

Assuming the five signals keep humming, and regulatory matters and monetary policy don’t get in the way, Bitcoin’s odds of clearing its prior all-time highs look very strong over the next couple of quarters.

A sensible playbook here is to build or top up a position gradually using dollar-cost averaging (DCAing). Keep some capital in reserve so you can act on buying any dips without making emotional decisions. And make sure the size of your position won’t upend your financial goals, even if Bitcoin drops 40% or more, which the crypto is entirely capable of doing.

For long-term investors, this is a moment to get exposure methodically and stay alert, rather than chasing hype. The key is being prepared and being patient enough to let the coin do the work for you to grow over time.