The proposed Brazilian plan to accumulate 1 million BTC over five years, representing approximately 5% of the total circulating Bitcoin, has indeed sparked a notable rebound in the cryptocurrency's price, with a 5% increase. To assess the sustainability of this bounce, let's break down the potential implications and factors at play.

Sovereign Accumulation Impact: If Brazil were to successfully accumulate 1 million BTC, it would indeed reduce the float and tighten supply. This reduction in available Bitcoin for trading could potentially drive up demand and, consequently, the price. However, the actual impact would depend on how the accumulation is executed, whether it's through direct market purchases or other means, and how it's perceived by the market.

Comparison with ETF Flows and Macro Risk Cycles: The effect of a sovereign entity accumulating Bitcoin should be considered in the context of broader market dynamics, including ETF (Exchange-Traded Fund) flows and macroeconomic risk cycles. ETF flows can significantly influence the price of Bitcoin, as they represent a more traditional investment channel that can attract a wider range of investors. Macro risk cycles, including economic downturns or geopolitical tensions, can also heavily influence cryptocurrency markets. The Brazilian proposal's impact might be marginal compared to these larger market forces, especially if the global economic situation deteriorates or improves significantly.

Structural Bid vs. Relief Rally: The current rebound could be interpreted in two main ways. On one hand, it could be the start of a structural bid, where the news of potential significant demand from a sovereign entity fundamentally changes the market's perception of Bitcoin's value and its potential for adoption. This could attract more investors, both institutional and retail, leading to a sustained price increase. On the other hand, it might simply be a relief rally in a fragile trend, where the price increase is a temporary response to positive news in an otherwise uncertain market environment. The sustainability of the rebound would depend on follow-through buying interest and the development of the Brazilian proposal.

Political, Fiscal, and Execution Hurdles: It's crucial to remember that the proposal faces significant hurdles. Political opposition, fiscal constraints, and the complexities of executing such a large-scale accumulation plan could all impact its success. The market's reaction might be premature if the proposal does not come to fruition or is significantly watered down.

In conclusion, while the Brazilian proposal is undoubtedly a positive development for Bitcoin, with potential to reduce supply and increase demand, its sustainability and overall impact on the market need to be considered in the context of broader market dynamics and the proposal's feasibility. The rebound could be a structural shift if the proposal progresses and is part of a larger trend of institutional and sovereign adoption, but it could also be a temporary relief rally if the market's fundamentals and external factors do not support a sustained price increase.