No Result
View All Result
SUBMIT YOUR ARTICLES
  • Login
Monday, October 6, 2025
TheAdviserMagazine.com
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
No Result
View All Result
TheAdviserMagazine.com
No Result
View All Result
Home Market Research Cryptocurrency

Crypto Faces Liquidity Endgame: Risks Mount By 2026

by TheAdviserMagazine
3 weeks ago
in Cryptocurrency
Reading Time: 7 mins read
A A
Crypto Faces Liquidity Endgame: Risks Mount By 2026
Share on FacebookShare on TwitterShare on LInkedIn


Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

Raoul Pal’s latest “Journey Man” episode brings back Michael Howell, CEO of CrossBorder Capital, for a sweeping tour of the liquidity landscape that has propelled risk assets like crypto for nearly three years. Both agree the global liquidity cycle is “late,” still advancing but increasingly mature, with its eventual peak most likely pushed into 2026 by policy engineering, bill-heavy issuance, and rising use of private-sector conduits.

The investment implication running through the conversation is unambiguous: long-duration assets—crypto and technology equities—remain the primary beneficiaries of ongoing currency debasement, yet the endgame is now visible on the horizon as a wall of debt refinancing and inflation risk approaches.

How Long Will The Liquidity Cycle Push Crypto Higher?

Howell’s high-level assessment is stark. “We’re late. It’s not inflecting downwards yet—we’re still in an upswing—but… the liquidity cycle is about 34 months old. That’s pretty mature.” In his framework, cycles typically run five to six years. Pal’s Everything Code—a synthesis of demographics, debt, and the policy liquidity needed to roll that debt—arrives at a similar destination, albeit with a slightly shorter cadence and a crucial timing nuance.

“My view is it’s been extended,” Pal says, adding that the peak “normally would have finished sometime this end of this year, but it feels like it’s going to push out.” Howell places the likely turn “around about early 2026,” with his model’s latest estimate at March 2026, while Pal is “in the camp of Q2” 2026. The difference is tactical; the thrust is the same: the late-cycle rally can run further, but investors are now operating inside the final act.

At the center of that act is what Howell calls a structural transition “from Fed QE to Treasury QE.” The US Treasury’s heavy tilt to short-dated bills over coupons lowers the average duration of paper held by the private sector. “Very crudely, we tend to think that liquidity is equal to an asset divided by its duration,” Howell explains.

Reducing duration mechanically boosts system liquidity. That issuance profile also corrals volatility and creates powerful bid auras: banks gladly absorb bills to match deposit growth, and, increasingly, so do stablecoin issuers managing cash to T-bill ladders. “If any credit provider buys government debt—particularly short-dated stuff—it’s monetization,” Howell notes. The result, in Pal’s summary, is that policymakers have shifted from balance-sheet expansion to a more complex “total liquidity” regime, where banks, money funds, and even crypto-native entities become the delivery rails of debasement.

Related Reading

The debate over near-term Fed liquidity hinges on reserves and the Treasury General Account. The quarterly refunding blueprint has telegraphed a rebuild of the TGA toward the high-hundreds of billions. Howell is unconvinced it happens quickly or fully, because draining that much cash would risk a repo spread spike, something the Fed and Treasury appear determined to avoid.

“Everything I hear… is they want to manage that liquidity. They don’t want to pull the rips on the markets,” he argues, adding that the Fed has effectively been targeting a minimum level of bank reserves since last summer’s stress-test changes. “The Federal Reserve controls bank reserves in aggregate completely,” Howell says. Even if the TGA edges higher, “you can find other ways of injecting liquidity… through Treasury QE or getting the banks to buy debt.”

Global Liquidity Remains Strong

The global overlay is every bit as important. Europe and Japan, as Howell frames it, are net-adding liquidity; China has moved decisively to ease via the PBoC’s toolkit—repos, outright OMOs, and medium-term lending—after a stop-start attempt in 2023.

Chinese 10-year yields and term premia have started to firm from depressed levels, which, paradoxically for asset allocators, “can be good” if it signals escape from debt-deflation toward reflation and a commodity up-cycle. “If you get this big Chinese stimulus continuing… that should mean stronger commodity markets,” Howell argues, with Pal adding that a revived China would restore the missing engine of the global business cycle even as liquidity remains the dominant market driver.

Japan is the outlier with a fascinating twist. Disaggregating term premia shows the selling is concentrated in the ultra-long end, not the belly or front of the curve. Howell’s inference is a duration rotation rather than a full-curve sovereign dump—“a switch from bonds into equities”—consistent with mild-inflation regimes that favor stocks. Why tolerate it?

Howell floats two possibilities: Japan “actually want[s] some inflation,” which quietly erodes debt burdens, and, more speculatively, “the Japanese are being told to ease monetary policy by the US Treasury,” keeping the yen weak to pressure China. He is careful to caveat, but the pattern—persistent yen weakness despite strong equity inflows—fits the policy-coordination narrative that Pal has long emphasized.

The U.K. and France, by contrast, look like textbook supply-shock sovereigns. Here, term premia have risen across the curve, reflecting heavy issuance, swelling welfare-state obligations, and weak growth. Howell highlights that the U.K.’s “underlying term premium [is] up over 100 basis points in the last 12 months,” a move that cannot be waved away as a single budget misstep.

The policy menu is narrow: higher taxes, eventual spending restraint (likely only enforced by a crisis or an IMF-style conditionality), and, ultimately, some form of monetization—whether relabeled QE, regulatory loosening to stuff more gilts into bank balance sheets, or de-facto yield-curve management. “Let’s not say never for [monetization] because that’s almost inevitably what’s going to happen,” Howell says.

Hovering over all of it is the dollar. On Howell’s preferred real trade-weighted lens, the dollar remains in a secular up-channel with a cyclical correction in train. Rest-of-world balance-of-payments data still show net inflows to the dollar system.

Pal and Howell agree that the administration wants a weaker dollar cyclically to ease the refinancing of the roughly half of global debt that is dollar-denominated, even if the dollar remains “fundamentally strong” as the world’s primary collateral system. That’s the paradox Pal underscores: “A weaker dollar allows people to refinance their debts… That ends up being the debasement of currency, even though you get dollar inflows.”

Related Reading

In that debasement regime, both men argue, long-duration, liquidity-sensitive assets lead. “You’ve got to start thinking about how to invest in the monetary inflation world,” Howell says. Pal is explicit about the winners: technology and, crucially, crypto. He frames both as living within “log trend channels” that extend higher as cycles are elongated by policy engineering.

The 2021 crypto blow-off, in his telling, was a sunset cycle; this time, the extension lengthens the price runway. Gold also fits the mosaic, but with a twist in its driver set. Pal observes that gold has decoupled from real rates and is now “highly correlated with financial conditions,” poised to break from a wedge if the dollar weakens and rates ease.

Crypto stablecoins occupy a pivotal, and underappreciated, role in the architecture. Howell calls them a “conduit” for public-sector credit creation, while warning that deposits migrating from banks to stablecoins can curb traditional credit growth. Pal widens the lens: stablecoins are effectively a “fractionalized eurodollar market down to individual level,” giving any household in any jurisdiction access to dollar liquidity and, by extension, democratizing the demand base for US bills. It is not lost on either man that Europe is scrambling for its own digital-money answer, even if politics likely forces a central-bank-led route.

The risks now crowd the 2026–2027 window. The COVID-era terming-out of corporate and sovereign debt will need to be rolled in size at meaningfully higher coupons. Howell also flags a cash-flow squeeze emanating from the corporate capex boom: “US tech companies [are] currently investing, what is it, a billion dollars a day in IT and infrastructure… over a couple of years that’s going to take about a trillion dollars out of money markets.” That drains liquidity even as profits rise. His historical analogue is the late-1980s sequence—rising yields, commodities firming, a policy signal misread, then an abrupt liquidity turn that cracked equities. He is not forecasting a crash, but he is clear that “we’re nearer the end than… the beginning.”

For now, neither man is bearish on the next three to six months. Pal’s Global Macro Investor financial conditions index points to an expansion, and Howell expects “pretty decent Fed liquidity” to persist as authorities avoid repo stress and lean on duration management.

“Through year end… generally I think it’s okay,” Howell says. “We will get wiggles… but the trend is intact and continues for a while.” The operative phrase is his earlier one: steady as she goes—into the liquidity endgame. Crypto sits squarely in that cross-current, the prime expression of monetary inflation even as the calendar inexorably advances toward a refinancing test that will decide whether today’s engineered extension ends in a soft plateau or a sharper turn.

At press time, the total crypto market cap stood at $3.95 trillion.

Total crypto market cap
Total crypto market cap faces key resistance, 1-week chart | Source: TOTAL on TradingView.com

Featured image created with DALL.E, chart from TradingView.com



Source link

Tags: CryptoendgamefacesLiquidityMountRisks
ShareTweetShare
Previous Post

Expected or Not, Inflation Still Hurts: 5 Ways to Ease the Squeeze

Next Post

Amsterdam-based Merqato’s Thomas Beelaerts steps down as founder

Related Posts

edit post
Rekordwoche für Bitcoin: Beflügelt das Allzeithoch nun auch Bitcoin Hyper?

Rekordwoche für Bitcoin: Beflügelt das Allzeithoch nun auch Bitcoin Hyper?

by TheAdviserMagazine
October 6, 2025
0

Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure Bitcoin und andere Kryptowährungen erleben eine Rekordwoche...

edit post
Ethereum’s Price as Grayscale Launches Staking ETPs – ,331?

Ethereum’s Price as Grayscale Launches Staking ETPs – $7,331?

by TheAdviserMagazine
October 6, 2025
0

The Ethereum price continues to attract significant attention after reclaiming a crucial resistance level, reinforcing optimism in the broader crypto...

edit post
Are South Korean retail traders the only thing keeping Ethereum treasury companies alive?

Are South Korean retail traders the only thing keeping Ethereum treasury companies alive?

by TheAdviserMagazine
October 6, 2025
0

Ethereum’s ongoing underperformance against Bitcoin has reignited debate over what’s holding the asset up, and who’s really behind its demand.According...

edit post
Bitcoin’s 2021 Playbook Shows The Final Price Target For This Bull Cycle

Bitcoin’s 2021 Playbook Shows The Final Price Target For This Bull Cycle

by TheAdviserMagazine
October 6, 2025
0

While the Bitcoin price seems to have deviated completely from the four-year cycle that dictated the previous bull and bear...

edit post
Russia Rejects Anti-Dollar Claims as Putin Defends BRICS Trade Strategy

Russia Rejects Anti-Dollar Claims as Putin Defends BRICS Trade Strategy

by TheAdviserMagazine
October 5, 2025
0

Vladimir Putin underscored that Russia’s BRICS strategy targets collaboration, not confrontation, insisting the bloc’s dollar shift reflects necessity and a...

edit post
Stablecoin-Focused GENIUS Act Is Beginning of the End for Banks

Stablecoin-Focused GENIUS Act Is Beginning of the End for Banks

by TheAdviserMagazine
October 5, 2025
0

The stablecoin-focused GENIUS Act, which was enacted in July, will trigger an exodus of deposits from traditional bank accounts into...

Next Post
edit post
Amsterdam-based Merqato’s Thomas Beelaerts steps down as founder

Amsterdam-based Merqato’s Thomas Beelaerts steps down as founder

edit post
From Hype To Scalable Impact

From Hype To Scalable Impact

  • Trending
  • Comments
  • Latest
edit post
What Happens If a Spouse Dies Without a Will in North Carolina?

What Happens If a Spouse Dies Without a Will in North Carolina?

September 14, 2025
edit post
California May Reimplement Mask Mandates

California May Reimplement Mask Mandates

September 5, 2025
edit post
Does a Will Need to Be Notarized in North Carolina?

Does a Will Need to Be Notarized in North Carolina?

September 8, 2025
edit post
DACA recipients no longer eligible for Marketplace health insurance and subsidies

DACA recipients no longer eligible for Marketplace health insurance and subsidies

September 11, 2025
edit post
‘Quiet luxury’ is coming for the housing market, The Corcoran Group CEO says. It’s not just the Hamptons, Aspen, and Miami anymore

‘Quiet luxury’ is coming for the housing market, The Corcoran Group CEO says. It’s not just the Hamptons, Aspen, and Miami anymore

September 9, 2025
edit post
Tips to Apply for Mental Health SSDI Without Therapy

Tips to Apply for Mental Health SSDI Without Therapy

September 19, 2025
edit post
Rekordwoche für Bitcoin: Beflügelt das Allzeithoch nun auch Bitcoin Hyper?

Rekordwoche für Bitcoin: Beflügelt das Allzeithoch nun auch Bitcoin Hyper?

0
edit post
5 Phrases to Avoid Saying to a Widowed Friend — How They Really Feel

5 Phrases to Avoid Saying to a Widowed Friend — How They Really Feel

0
edit post
Sebi chairman warns retail investors against speculative trading in derivatives

Sebi chairman warns retail investors against speculative trading in derivatives

0
edit post
Estate Planning for Restricted Stock Units: What You Need to Know

Estate Planning for Restricted Stock Units: What You Need to Know

0
edit post
More Workers Push Back as Return-to-Office Mandates Intensify

More Workers Push Back as Return-to-Office Mandates Intensify

0
edit post
David Ellison says he’s confident Bari Weiss ‘will invigorate CBS News’ as new editor-in-chief

David Ellison says he’s confident Bari Weiss ‘will invigorate CBS News’ as new editor-in-chief

0
edit post
Rekordwoche für Bitcoin: Beflügelt das Allzeithoch nun auch Bitcoin Hyper?

Rekordwoche für Bitcoin: Beflügelt das Allzeithoch nun auch Bitcoin Hyper?

October 6, 2025
edit post
More Workers Push Back as Return-to-Office Mandates Intensify

More Workers Push Back as Return-to-Office Mandates Intensify

October 6, 2025
edit post
David Ellison says he’s confident Bari Weiss ‘will invigorate CBS News’ as new editor-in-chief

David Ellison says he’s confident Bari Weiss ‘will invigorate CBS News’ as new editor-in-chief

October 6, 2025
edit post
How to Hire Movers in Six Steps

How to Hire Movers in Six Steps

October 6, 2025
edit post
Dow falls, S&P 500 and Nasdaq rise as AMD surges on OpenAI deal, shutdown drags on

Dow falls, S&P 500 and Nasdaq rise as AMD surges on OpenAI deal, shutdown drags on

October 6, 2025
edit post
Catalonia’s Sugary Beverage Tax Hasn’t Improved Public Health

Catalonia’s Sugary Beverage Tax Hasn’t Improved Public Health

October 6, 2025
The Adviser Magazine

The first and only national digital and print magazine that connects individuals, families, and businesses to Fee-Only financial advisers, accountants, attorneys and college guidance counselors.

CATEGORIES

  • 401k Plans
  • Business
  • College
  • Cryptocurrency
  • Economy
  • Estate Plans
  • Financial Planning
  • Investing
  • IRS & Taxes
  • Legal
  • Market Analysis
  • Markets
  • Medicare
  • Money
  • Personal Finance
  • Social Security
  • Startups
  • Stock Market
  • Trading

LATEST UPDATES

  • Rekordwoche für Bitcoin: Beflügelt das Allzeithoch nun auch Bitcoin Hyper?
  • More Workers Push Back as Return-to-Office Mandates Intensify
  • David Ellison says he’s confident Bari Weiss ‘will invigorate CBS News’ as new editor-in-chief
  • Our Great Privacy Policy
  • Terms of Use, Legal Notices & Disclosures
  • Contact us
  • About Us

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.