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The cryptocurrency market is entering a distinct phase, according to Real Vision analyst Jamie Coutts, who explained that the current Bitcoin cycle is being influenced far more by global liquidity than the traditional four-year issuance schedule. In a detailed interview with “Crypto Kid,” Coutts outlined a cycle framework emphasizing policy decisions, bank credit expansion, and balance-sheet dynamics, while cautioning that short-term momentum warnings and waning corporate-treasury buying deserve attention.
Why This Bitcoin Cycle Stands Out
Coutts highlighted that global liquidity, rather than supply halving events, is now the primary driver of risk assets, including Bitcoin. He noted that regressing Bitcoin’s price against a liquidity composite—constructed from central-bank balance sheets, global money supply, foreign exchange reserves, and elements of commercial and shadow banking—shows strong explanatory power. However, he warned that correlations are dynamic and non-stationary, and overfitting past trends can be misleading.
Despite some recent divergences between rising global liquidity and Bitcoin prices, especially since the launch of US spot ETFs, Coutts emphasized that the gap is within Bitcoin’s normal volatility. The key is to monitor liquidity over multiple quarters and understand the underlying factors driving it.
Policy Shifts and Market Implications
Coutts anticipates a pivot in Western central-bank policies, predicting likely interest-rate cuts in upcoming meetings and potential tapering of balance-sheet reductions. He emphasized the concept of “fiscal dominance,” where the US government’s substantial deficits compel monetary authorities to support Treasury absorption. In this framework, central-bank policies are closely aligned with government financing needs rather than solely focusing on inflation or unemployment.
Most money creation, Coutts noted, originates from commercial banks extending credit, accounting for 85%–90% of new money supply. This supply can be further amplified when central banks expand balance sheets or adjust regulations to encourage banks to accumulate Treasuries. He also highlighted the role of dollar stablecoins as potential new distribution channels for US debt, reinforcing the structural liquidity backdrop favorable to Bitcoin over time.
The Business Cycle Factor
Layered atop policy considerations is the business cycle. Coutts observed that the US is edging toward expansion, citing ISM readings above 50. He described a “Goldilocks” scenario where an economic upturn coincides with rising liquidity, creating an environment supportive of risk assets. According to Coutts, this combination may be a more significant driver than the familiar four-year Bitcoin halving cycle. As Bitcoin’s issuance declines over successive halvings, the supply-shock effect diminishes, while liquidity and growth conditions dominate allocations to “anti-debasement assets.” He argued that Bitcoin, with Ethereum also benefiting over the longer horizon, is emerging as the principal anti-debasement asset today.
China’s role is notable, Coutts explained, with the People’s Bank of China expanding its balance sheet amid property-led debt deflation and risk-asset revival efforts. This liquidity surge has supported Chinese equities and gold priced in yuan. Historical patterns suggest late-stage Bitcoin strength often aligns with Chinese equity peaks, reinforcing the link between liquidity and asset performance globally.
Momentum and Risk Signals
Despite structural support, Coutts warned of caution in the short term. He flagged a weekly-timeframe bearish divergence in Bitcoin momentum as a genuine risk signal, drawing parallels to warning signs preceding major crises such as the 2008 financial collapse and the 2020 pandemic. Divergences, while probabilistic rather than deterministic, suggest that investors should employ risk management strategies rather than ignoring early signs of weakening momentum.
Corporate-Treasury Dynamics
A notable factor affecting near-term momentum is the cooling of corporate-treasury demand for Bitcoin. Coutts observed that entities like MicroStrategy, which drove significant accumulation in 2024, have reduced their intensity of purchases. Copycat strategies among smaller companies have diluted the market impact, leaving some players trading below intrinsic value. While ETFs provide steadier bids, they lack the leverage-driven reflexivity that corporate-treasury buying once offered.
The End of Traditional Altseason?
Coutts argued that the traditional “altseason” of 2021, characterized by indiscriminate speculation in Layer-1 and Layer-2 tokens, is unlikely to repeat. Today’s crypto market has achieved product-market fit, with stronger networks demonstrating real utility, user adoption, token-burning mechanisms, and sustainable cash flows. Investors are now more selective, concentrating on credible platforms and real-world applications, which Coutts predicts will shape a broader asset-class bull market with greater dispersion than the previous cycles.
Conclusion
In Coutts’ view, this Bitcoin cycle differs from prior iterations, being driven less by supply shocks and more by liquidity conditions, policy actions, and macroeconomic cycles. While momentum signals caution in the short term, the long-term framework remains structurally supportive, with Bitcoin emerging as the preeminent anti-debasement asset. Investors are advised to monitor liquidity trends, central-bank policies, and corporate demand dynamics, while employing disciplined risk management to navigate the nuanced market landscape.
As of press time, Bitcoin was trading at $112,946, reflecting the ongoing tug-of-war between structural bullish factors and short-term momentum constraints.
