Why Bitcoin’s New Cycle Will Make You Laugh and Cry đŸ€ŁđŸ˜­

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In a world where the digital and the real blur into an indistinguishable haze, Real Vision analyst Jamie Coutts has emerged as a beacon of clarity-or perhaps a lighthouse in a fog of mirrors. In his recent tĂȘte-Ă -tĂȘte with the enigmatic “Crypto Kid,” Coutts navigates the treacherous waters of the current bitcoin market, suggesting that the old adages of the four-year issuance cycle have been supplanted by a tsunami of global liquidity that is only just beginning to crest.

“From a first-principles basis, global liquidity
 drives risk assets,” Coutts opines, with the solemnity of a man who has seen the inner workings of the financial machine and lived to tell the tale. His analysis, built upon the foundations of central-bank balance sheets, global money supply, FX reserves, and the shadowy underbelly of commercial and shadow banking, reveals a connection so profound that one might almost call it a conspiracy. Yet, he warns, “Markets are non-stationary
 The correlation itself is a moving target, so I wouldn’t get too tied up in charts where you’re fine-tuning the lag. That lag period will change all the time.”

But let us not be too quick to dismiss these correlations, for Coutts insists that the link between liquidity and risk is “as good as anything I’ve ever seen.” This, dear reader, is the heart of the matter: in a world where the Federal Reserve and its ilk are the puppet masters, pulling strings to keep the financial system afloat, the flow of liquidity is the lifeblood of the markets. And bitcoin, in this grand theater of finance, is the star player, the anti-debasement asset par excellence.

Yet, as with all things in life, there are clouds on the horizon. The short-term divergences between rising global liquidity gauges and bitcoin’s price since the launch of US spot ETFs have raised eyebrows. But Coutts, ever the contrarian, dismisses the notion that the linkage has “broken.” “Within the volatility scope of the asset, [there’s] nothing to worry about,” he assures us, though he does note that his own dollar-sensitive proxy has “been flatlining for a little bit longer” than some popular versions. The real question, he stresses, is whether liquidity is rising on a multi-quarter view-and why.

And rise it shall, if Coutts’ predictions are to be believed. He foresees an imminent inflection in Western central-bank posture, with rates likely heading lower and balance-sheet tightening at least tapering. “I think it’s very likely we’ll see interest-rate cuts in the September meeting,” he predicts, adding with a sardonic smile, “The question is will the Fed also announce the end of QT or further tapering of QT?” Behind this pivot, he argues, lies the specter of “fiscal dominance”-the US government’s outsized deficits and refinancing needs compelling monetary authorities to ensure smooth absorption of Treasury supply. “You can forget what they tell you about stable prices and unemployment. They are there to hold up the financial system
 and now they are very much tied to the hip of the US government.”

But the story does not end there. For Coutts, the real engine of liquidity creation lies not with central banks but with commercial banks, which are responsible for around 85% to 90% of all new money supply. When central banks expand their balance sheets or alter regulations to encourage banks to accumulate more Treasuries, liquidity can be “supercharged.” And in this brave new world, Washington’s friendlier posture toward crypto and stablecoins is not merely a nod to innovation but a strategic move to create new distribution channels for US debt. Thus, the structural backdrop remains one of increasing liquidity, despite the noise in the near term.

Layered atop this policy landscape is the business cycle, which Coutts believes is edging the US back into expansion. The “Goldilocks” setup, he suggests, occurs when an upturn in growth coincides with a surge in liquidity. This, he posits, is the true driver behind the familiar four-year bitcoin rhythm. “Are we really looking at a liquidity cycle that’s dressed up as a bitcoin halving cycle?” he asks, noting that as issuance declines over successive halvings, the supply-shock effect becomes “less significant,” while liquidity and growth conditions take center stage. In this race, “Bitcoin is the emergent anti-debasement asset of the present and the future,” he declares, with Ethereum playing a supporting role.

China, too, plays a pivotal role in this drama. The People’s Bank of China’s expanding balance sheet, amid a property-led debt deflation, is linked to improving Chinese equities and surging gold prices in yuan terms. Coutts sees a pattern emerging, where late-stage bitcoin strength aligns with Chinese equity peaks, driven by the same force-liquidity. While two cycles may not be statistically significant, the mechanism is clear: “What’s driving Chinese equities, what’s driving bitcoin? The same thing-it’s liquidity.”

Yet, even in the face of such structural support, Coutts urges caution. A weekly-timeframe bearish divergence in bitcoin’s momentum serves as a genuine risk signal. “Divergences are warning signals
 The trend is losing momentum,” he warns, drawing parallels to the 2008 crisis and the 2020 pandemic shock. Such signals are probabilistic, not fate, but they should not be dismissed. Investors, he advises, should consider “countervailing circumstances” and implement risk-management strategies.

Why This Bitcoin Cycle is DIFFERENT! (Explained by @Jamie1Coutts)

Timestamps:
00:00 Intro
01:05 Global Liquidity and M2 Money Supply
07:19 Fed’s Balance Sheet
14:45 Liquidity Cycles or Halving Cycles
19:04 Chinese Equities and Bitcoin
23:25 The Bearish Divergences
35:08


– Crypto Kid (@CryptoKidcom) September 6, 2025

Adding to the cautionary tale, Coutts flags a cooling in the marginal demand engine that powered much of 2024: corporate-treasury accumulation of bitcoin. “The marginal buyer of bitcoin has been treasury companies and ETFs,” he notes, but the “intensity of buying” by treasury vehicles “peaked in Q4 of 2024.” As premiums compress and capital-markets windows narrow, “they can’t buy at the same intensity anymore,” acting as a drag at the margin. The host points out that MicroStrategy’s market-to-NAV premium has recently hovered around 1.5%, with Michael Saylor suggesting that issuance is far more attractive above 2.0. Coutts’ broader point is that a proliferation of copycats has diluted the strategy, leaving many smaller names trading below intrinsic value-potential acquisition targets for stronger operators if discounts persist.

On the topic of “altseason,” Coutts is blunt: this time will not resemble the 2021 mania fueled by helicopter money. Crypto, he argues, has found its product-market fit, with higher-quality networks boasting users, cash flows, and token-burn mechanics that appeal to traditional allocators. “The new buyers are much more discerning. They’re not going to buy the 15th or 16th L1, the 10th L2,” he asserts, predicting concentration in a handful of credible platforms and real-world use cases. He hopes the industry will “never say the word ‘altseason’ again,” preferring to describe the coming era as a broader “asset-class bull market” with greater dispersion. The “banana zone” of 2021, he adds, was a creature of lockdowns and stimulus checks; the “velocity of stimulus is different” now, and so should be our expectations.

At press time, BTC traded at $112,946.

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2025-09-09 12:08