Macro View: The Liquidity Cycle and Crypto
The global liquidity cycle is something most crypto traders ignore, but it's probably the single biggest driver of BTC price.
Here's what's happening:
US: Fed paused at 4.25%. Market is pricing in 2 cuts this year. M2 money supply has been expanding since late 2025. Treasury General Account drawdown is adding liquidity.
China: PBOC has been quietly easing. RRR cuts, MLF rate cuts, targeted lending to property sector. Yuan is weakening which historically correlates with capital flowing into BTC (through OTC desks).
Japan: BOJ is the wildcard. If they tighten further, yen carry trade unwind could cause a short-term risk-off event. But structurally they can't tighten much without breaking JGB market.
Net effect: Global liquidity is expanding. This is the tailwind that took BTC from 15k to 100k. Until this reverses, the path of least resistance is up.
The risk I'm watching: US 10Y yield. If it breaks above 5% again on sticky inflation data, that could trigger a correction regardless of liquidity. But that's not my base case.
Position: 70% BTC, 20% ETH, 10% stables for dips.