Key takeaways:

Bitcoin’s price closely tracks global liquidity growth, with liquidity explaining up to 90% of its price movements, according to Raoul Pal.

In the long term, global liquidity continues to expand, driven by the increasing debt levels in many countries.

On a shorter timeframe, global liquidity follows a cyclical pattern, with Michael Howell projecting the current cycle to peak by mid-2026.

Bitcoin (BTC) price is notoriously sensitive to global liquidity. Some analysts go as far as calling their correlation near-perfect, with a lag of about three months. This relationship is fueling the current bullish narrative as BTC price soars back above $100,000, but how long can this trend last?

Liquidity is Bitcoin’s silent price driver

Raoul Pal, the founder of Global Macro Investor, recently gave a speech on the strong correlation between Bitcoin and global M2 liquidity. In a recap posted by Paul Guerra, Pal’s message refers to: despite looming concerns—recession risks, geopolitical tensions, and other global stressors—rising liquidity as the dominant force behind asset price action. 

According to Pal, expanding liquidity backs up to 90% of Bitcoin’s price action and as much as 97% of the Nasdaq’s performance. Indeed, a chart comparing global M2 (with a 12-week lead) and Bitcoin’s price shows an almost uncanny alignment.

Global M2 and BTC/USD. Source: Real Vision

Pal also frames the issue in personal finance terms. He says there’s an 11% “hidden tax” on all of us, composed of 8% currency debasement and 3% global inflation. He notes,

“If you’re not earning more than 11%/yr, you’re getting poorer by definition.”

Bitcoin has returned an average of 130% annually since 2012, despite dramatic drawdowns. That makes it one of the most asymmetric bets of the past decade—and it’s outperformed the Nasdaq by over 99%.

What drives global liquidity?

At its core, global liquidity is fueled by expanding the money supply. As independent investor Lyn Alden puts it,

“Fiat currency systems are primarily based on ever-growing debt levels. The money supply continuously grows in every country for this reason.”

This offers a high-level view of global liquidity and suggests its long-term expansion is structural. However, this growth isn’t linear. Over shorter time frames, it fluctuates based on specific drivers. Michael Howell, author of “Capital Wars,” identifies three main drivers currently impacting global liquidity: the US Federal Reserve, the People’s Bank of China (PBoC), and banks lending through collateral markets.

Global liquidity drivers. Source: Michael Howell

Howell also points to indirect influences that act with a lag of 6 to 15 months. These include the world business cycle, oil prices, dollar strength, and bond market volatility. A weak global economy and a softening dollar typically boost liquidity. But rising bond volatility tightens collateral supply and chokes lending, undermining liquidity.

Related: New bull cycle? Bitcoin’s return to $100K hints at ‘significant price move’

How long will global liquidity rise?

Michael Howell believes that global liquidity moves in roughly five-year cycles, and is now on the way to its local peak. He projects the current cycle to mature by mid-2026, reaching an index level of around 70 (below the post-COVID index of 90). That would mark a turning point, with a subsequent downturn being a likely outcome.

Global liquidity cycle. Source: Michael Howell

The recent growth in global liquidity stems from the rapidly weakening world economy, which is likely to prompt further easing by central banks. The People’s Bank of China has already begun injecting liquidity into the system. The Fed now faces a tough choice: continue fighting inflation or pivot to support an increasingly fragile financial system. At its May 7 meeting, rates were held steady, but the pressure on Chair Jerome Powell is mounting, especially from US President Donald Trump.

At the same time, economic uncertainty is driving up US Treasury yields and fueling bond market volatility, both indicators of collateral scarcity and tightening credit conditions. Over time, these pressures are likely to become headwinds for liquidity expansion. Meanwhile, a looming recession is expected to weaken investor risk appetite, further draining liquidity from the system.

Even if a downturn lies ahead in 2026, global liquidity still has room to run, at least through 2025. And that matters for Bitcoin.

Howell notes,

“The likely inevitable policy response of ‘more liquidity’ is a great future omen. It establishes the upward path of persistent monetary inflation that ultimately underpins hedges such as gold, quality equities, prime residential real estate, and Bitcoin.”

Interestingly, Howell’s liquidity cycle roughly aligns with Bitcoin’s four-year halving cycle. The former points to a potential peak in late 2025, and the latter in early 2026. If history rhymes again, that convergence could set the stage for a major price move.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Law enforcement detained the wrong person for a 2022 scam that pilfered more than $1 million worth of Bored Ape non-fungible tokens (NFTs), cybersecurity researcher ZachXBT said. 

In a May 9 X post, ZachXBT said he identified the wallet behind the scam and linked it to an X account that has since been deleted. 

But in 2023, law enforcement detained Sam Curry, a former Yuga Labs security researcher, at an airport as a suspect in the incident, ZachXBT said. Yuga Labs is the company behind the Bored Ape Yacht Club NFT collection. 

“It’s unfortunate to see how a security researcher was detained when stronger leads on a threat actor potentially responsible exist,” ZachXBT said.

The attacker stole 14 Bored Ape NFTs in 2022. Source: ZachXBT

Related: Crypto sleuth ZachXBT says he unmasked 50x Hyperliquid whale

Anonymous attacker

In December 2022, an anonymous attacker stole 14 Bored Ape Yacht Club NFTs, which at the time traded for roughly $86,000 each, according to data from CoinSlam.

Law enforcement then “mistakenly reviewed logs from OpenSea which included [Curry’s] home IP address and used this to incorrectly link him as the suspect,” ZachXBT wrote.

“In reality as part of his security work at Yuga, [Curry] had been investigating the theft and used a private key put in the JavaScript of the website by the threat actor,” ZachXBT said. 

ZachXBT said he used forensic tracing — including reconstructing the flow of funds through Tornado, an Ethereum mixer — to identify a person he alleges is a likely suspect in the 2022 theft.

He said law enforcement officials should “request all data related to [the individual’s] social media accounts” and dig into on-chain transactions associated with their alleged wallet. 

Launched in 2021, Bored Ape Yacht Club is among the most valuable NFT collections, with a cumulative market capitalization of more than $300 million, according to data from CoinGecko.  

As of May 9, Bored Ape NFTs trade for roughly $30,000 each, according to NFT marketplace OpenSea. Individual NFTs vary in price due to unique characteristics. 

Magazine: Adam Back says Bitcoin price cycle ’10x bigger’ but will still decisively break above $100K

Galaxy Digital has been approved by the US Securities and Exchange Commission (SEC) to redomicile in the United States, setting the stage for the crypto investment company’s listing on the Nasdaq stock exchange.

Galaxy anticipates listing on the Nasdaq, a tech-focused US stock exchange, by the middle of May, pending approval from the Toronto Stock Exchange, on which the company is already listed, and shareholder approval at a special shareholders meeting on May 9.

Shareholders at the meeting must approve redomiciling Galaxy Digital in the US state of Delaware, known for its business-friendly regulations, before the process can move forward, according to an announcement from the company.

Galaxy Digital SEC form S-4. Source: SEC

Galaxy obtained SEC approval for a Nasdaq listing in April this year, and once the company obtains the other necessary approvals, it will trade on the Nasdaq under the GLXY ticker symbol.

The company is the latest crypto firm to announce an imminent stock market listing, as institutional interest in digital assets grows and crypto matures as an asset class that increasingly interacts with traditional financial markets.

Related: Nasdaq urges SEC to treat certain digital assets as ‘stocks by any other name’

Crypto firms increasingly playing in the big leagues

Nasdaq-listed Strategy, formerly MicroStrategy, was added to the exchange’s index of its 100 largest companies by market capitalization in December 2024.

In April, stablecoin issuer Circle filed for an initial public offering (IPO), a process of taking a private company public by listing it on major stock exchanges.

According to an April 21 report from The Wall Street Journal, crypto custodian BitGo, Circle, exchange company Coinbase, stablecoin firm Paxos, and other crypto firms are considering applying for bank charters in the US.

The move would further blur the diminishing line between crypto firms and traditional financial institutions that offer lending services to clients and adhere to strict financial oversight from government regulators.

However, Dante Disparte, Circle’s chief strategy officer and head of global policy, later clarified that the company may acquire a banking license to comply with existing regulations and not necessarily operate as a banking institution.

Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight