Jan 28, 2026
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BULLISH 📈 : Global liquidity cycle extension supports crypto market growth
Crypto analyst Matt Hughes suggests the global liquidity cycle is extending beyond its usual pattern, indicating a potential super-cycle since 2020. This extended cycle challenges bearish positions in crypto markets.
Key Points
- The traditional end of liquidity cycles through central bank tightening is hindered by high debt levels, fragmented global money creation, and continuous investment demands.
- Global leverage constrains economic normalization, with debt exceeding 350% of GDP, requiring larger policy responses to prevent financial stress.
- Hughes notes that global liquidity is now influenced by multiple entities, reducing the dominance of any single central bank and allowing for liquidity creation outside the US.
- An unusually large capital demand from sectors like AI and blockchain absorbs substantial liquidity, supporting risk assets and suggesting the cycle is closer to its start.
- Central banks are proactive in preventing downturns, using tools such as forward guidance, yield curve control, and fiscal-monetary coordination.
Concerns were raised about the slowing momentum of liquidity, but Hughes believes liquidity can shift into other assets if the economy remains strong. The debate focuses on whether the super-cycle's length will dominate or if slowing liquidity impacts the market strategy.
At present, the total crypto market cap is $2.95 trillion.
