Crypto in Late-Cycle Stage, Warns Liquidity Expert Michael Howell

Michael Howell, a global liquidity specialist, warned on the Bankless podcast that the "everything bubble" is ending as global refinancing slows. He emphasizes that crypto is late in this cycle, not starting a new one.

Key Points

Howell defines liquidity uniquely, focusing on financial market flows rather than traditional bank deposits.
The Global Liquidity Index shows liquidity doubling from under $100 trillion in 2010 to nearly $200 trillion now.
He identifies a stable 65-month liquidity cycle, mainly driven by debt refinancing rather than new investments.
The debt-to-liquidity ratio indicates when asset bubbles form or financing tensions arise.
The current transition from the "everything bubble" reflects tighter funding conditions and coming refinancing needs.
Short-term focus includes Federal Reserve operations and repo market stresses.
Liquidity regimes classify the US as in "speculation," while Europe and parts of Asia are in "late calm."

Impact on Crypto Market

Crypto behaves like both a tech stock and a commodity.
Bitcoin's performance is influenced 40-45% by global liquidity.
Howell doubts a fixed four-year Bitcoin cycle, favoring the 65-month liquidity cycle as a better predictor.
Monetary inflation is expected to continue for decades, requiring hedges like Bitcoin and gold.
Currently, cautious about risk assets but sees potential in long-term hedges during upcoming weaknesses.

At press time, the total crypto market cap was $2.96 trillion.

Total crypto market cap