Oct 26, 2026 · 1h 18m
Bitcoin tests whether global liquidity is turning sooner
What Is Bitcoin Telling Us? | Michael Howell, Macro Analyst
The episode examines whether Bitcoin’s resilience signals an earlier liquidity recovery or merely a temporary pause before further tightening.
- 1Treasury yields reflect more than fiscal stress, while higher borrowing costs can reshape liquidity and asset allocation.
- 2Howell’s four regimes place Bitcoin primarily among monetary-inflation hedges, while broader crypto behaves more like a technology asset.
- 3Liquidity growth may weaken cyclically, but continued monetary expansion could support gold and Bitcoin over the long term.
Don't miss
Howell explains why Treasury buybacks and related policy can function as a form of Treasury QE, with bond-market volatility shaping liquidity conditions.
The brief
Michael Howell revisits his earlier late-cycle call and asks whether Bitcoin’s resilience near $70,000 signals a shorter, shallower liquidity downturn—though he says an early recovery is not yet his base case.
Rising Treasury yields sit at the center of the debate: Howell separates their components, questions bond-demand explanations and shows why Bitcoin reacts sharply to changes in rates.
Howell maps markets across turbulence, rebound, calm and speculation, arguing that Bitcoin functions mainly as a monetary-inflation hedge while broader crypto tracks technology and the real economy.
The discussion links Treasury buybacks, volatility control and the MOVE index to liquidity, while AI investment creates an unusual growth force that could also amplify valuation risk.
Howell’s long view is cautiously expansive: liquidity can contract in cycles, but a credit-money system keeps pushing monetary growth, supporting gold and Bitcoin as hedges.
What was said on this episode
29 statements · 15 positive · 8 negative · 2 mixed · 4 neutral
Liquidity drives Bitcoin, with Bitcoin stability also providing information about liquidity conditions.
“liquidity drives Bitcoin, but there are clearly feedback effects”
Listen at 2:01
Bitcoin may signal the early stages of a two-to-three-year liquidity-driven bull market.
“Bitcoin could be saying, well, actually we're entering now the early stages of what will turn out to be another two to three year bull market”
Listen at 2:32
Bitcoin above $70,000 and rising bank reserves would support an expectation of recovering liquidity.
“If you get Bitcoin holding above 70,000, if you see more evidence that bank reserves... are being managed and maybe even being pushed up, then I would happily change my view and expect to see liquidity picking up.”
Listen at 8:51
Bitcoin is highly sensitive to changes in Treasury yields because it is a long-duration asset.
“Bitcoin is a very long duration asset, okay? And that means it's very sensitive to changes in treasury yields.”
Listen at 12:18
Short-duration government debt issuance increases liquidity.
“it's clearly liquidity positive”
Listen at 19:28
Bonds may act as a short-term safe haven during a liquidity downswing.
“in the short term, they're actually maybe a safe haven if this liquidity downswing continues”
Listen at 22:02
Bitcoin cannot absorb bond-market-scale asset allocation shifts.
“you simply can't put that amount of money into Bitcoin”
Listen at 23:42
“treasury debt, federal debt, has increased at an annual clip of about 8.5%”
Listen at 25:44
Treasury inflation-protected securities yielding 3% real are attractive.
“the inflation-protected securities are yielding 3%, I mean, that's not a bad deal, actually”
Listen at 31:02
The fiscal deficit and AI capital spending are major current U.S. growth drivers.
“the big fiscal deficit and the AI capex spend are clearly big drivers of America right now”
Listen at 32:30
Equities generally perform well during the liquidity rebound phase.
“The rebound phase for liquidity, and that is a phase when equities generally do pretty well.”
Listen at 36:50
The speculation phase is dominated by commodities.
“In Speculation, which is the phase that whether in or is just ending, it's dominated by commodities”
Listen at 39:15
The turbulence phase is likely the next phase of the liquidity cycle.
“turbulence, which is the upcoming phase in all likelihood”
Listen at 39:30
Bitcoin should outperform altcoins during liquidity downturns, while altcoins should lead during upswings.
“Bitcoin should outperform crypto in the downswing of the liquidity cycle, but the rest of crypto, altcoins or whatever, would be outperforming Bitcoin in the upswing.”
Listen at 40:54
Equity price-to-earnings multiples generally decline late in the cycle.
“PE multiples tend to come down basically at the end of the cycle”
Listen at 43:07
High-yield borrowers are often squeezed when liquidity tightens.
“it tends to be high yield borrowers that often get squeezed in this environment”
Listen at 46:46
AI will transform the world economy.
“AI is going to transform the world economy. There's no question about that.”
Listen at 49:17
Fiber-optic prices collapsed 80%, contributing to Global Crossing’s bankruptcy.
“The reason being is that fiber optic prices collapsed by 80%.”
Listen at 50:28
Treasury QE is currently functioning as money printing.
“Short answer is it is money printing. So it's here and now.”
Listen at 52:08
MOVE index readings above 90 impair liquidity creation.
“if you get above 90 on the index, it impairs liquidity creation”
Listen at 58:31
MOVE index readings above 135 are almost always associated with recession.
“If you get above 135, it's almost always consistent with recession in the real economy.”
Listen at 58:46
Increased Chinese liquidity ultimately drove gold prices higher after early 2022.
“a big increase in the amount of liquidity that China was pumping into its markets from early 22, and that ultimately led to a rise in the gold price”
Listen at 1:02:53
Investors should buy gold when prices weaken.
“I think to buy it in weakness makes a lot of sense”
Listen at 1:05:52
Bitcoin will rise when the liquidity cycle turns upward.
“Bitcoin's going to go up because the liquidity cycle is going to turn.”
Listen at 1:09:40
Debt and liquidity must move together over the long term.
“Over the long term, debt and liquidity must move in harmony”
Listen at 1:12:11
Global liquidity will at least double within ten years.
“the stock of global liquidity will easily be double what it is now in 10 years' time”
Listen at 1:12:49
Bitcoin will at least double over the long term.
“the fact is that Bitcoin over that period is easily going to double”
Listen at 1:13:44
Credit-money economies require continued monetary expansion.
“on the basis that we continue to operate in a credit money economy, the answer is that there's no alternative. This is what's going to happen.”
Listen at 1:14:58
Investors should hold gold, Bitcoin, and other monetary-inflation hedges.
“you've got to be invested in things like gold, Bitcoin and monetary inflation hedges.”
Listen at 1:16:53
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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