The reversal of the US dollar liquidity cycle: macro opportunities for crypto assets in 2026

In financial markets, historical data often reveal the truth behind asset prices. Just as skiers analyze snowpack characteristics across different periods by digging into the snow slopes, financial analysts need to understand the logic of price fluctuations through charts and historical events. Currently, Bitcoin, gold, and the Nasdaq index exhibit markedly different trends amid volatile liquidity environments, reflecting deep shifts in capital flows and policy directions.

According to the latest data, Bitcoin is currently priced at $68.83K, at a low point for 2025. In stark contrast, gold and tech stocks remain resilient at high levels. This divergence is not accidental but stems from the complex evolution of US dollar liquidity. This article will delve into the linkage between these three major assets and liquidity cycles, and explain the inevitability of a US dollar funding reversal in 2026.

Liquidity Indicators Reveal Asset Truths

Over the past year, the performance differences among Bitcoin, gold, and the Nasdaq have been significant. Gold and stocks rose against the trend, while Bitcoin faced downward pressure, seemingly contradicting traditional liquidity theories. However, when we overlay these asset prices with US dollar liquidity indicators, everything becomes clear.

The core principle is: When US dollar liquidity expands, Bitcoin and the Nasdaq tend to rise.

Throughout 2025, the Federal Reserve implemented quantitative tightening (QT), leading to a continuous contraction of its balance sheet. This was the fundamental reason suppressing crypto assets. But a turning point has emerged: in December 2025, the Fed ended QT and introduced the “Reserve Management Purchase” (RMP) program, committing to inject at least $40 billion monthly into the market. This marks a shift in monetary policy cycle.

The Central Bank Logic Behind Gold

The surge in gold prices is not driven by retail speculation but by strategic choices of global central banks. It reflects a fundamental shake-up in confidence in US dollar assets.

In 2022, the US froze Russian sovereign debt, shocking the global financial system. This sent a clear signal: US Treasuries are not an absolute safe haven. Subsequent sanctions on countries like Venezuela further reinforced this realization. Central banks worldwide began to rationally reconsider—rather than hold assets that could be frozen, they prefer accumulating lower-risk gold.

Data confirms this trend: over the past 20 years, global central bank holdings of US Treasuries have peaked and declined, while gold holdings have steadily increased. The ratio of holdings in GLD (SPDR Gold ETF) to gold prices indicates that retail speculative fervor has not yet ignited; the real buyers are sovereign nations “insensitive to price.”

Even more notable is US gold export data, which reveals shifts in global trade patterns. In October 2025, US gold exports hit record highs, with much of this gold flowing to emerging economies like China and India. These countries exchange manufacturing and commodity exports for gold, reflecting a return to a subtle “gold standard” mechanism (many emerging economies have gender ratios over 100, and demographic imbalances heighten demand for asset safety).

If gold’s share in global central bank foreign exchange reserves can return to 1980s levels, its price could break through $12,000. This is not fantasy but a rational projection based on central bank asset allocation logic.

Government Backing of Tech Stocks

In 2025, the Nasdaq diverged sharply from Bitcoin and US dollar liquidity. The reason for tech stocks’ contrarian strength lies in the Trump administration’s support for the nationalization of the AI industry.

Trump has been fully convinced of AI’s “strategic value.” During his term, the US government positioned AI as a core element of national competitiveness. This is not just industrial policy but a national strategy involving military strength and global influence. Through executive orders and direct investments, the government diminished market signals, causing capital to flood into AI-related sectors regardless of actual returns.

JPMorgan Chase and other major banks responded to government calls by launching $1.5 trillion in credit facilities to “strategic enterprises.” Government backing (via equity investments or procurement commitments) effectively eliminated default risk for these companies, encouraging banks to create money to support these projects.

This model mirrors China’s industrial policies—where the government explicitly prioritizes certain industries, and capital markets focus investments accordingly. Chinese stock investors have fully grasped this pattern, while US investors remain naive.

It’s important to remember: history shows that when political goals conflict with commercial interests, politics often win. Chinese tech stock investors have paid the price for this lesson. US investors should take this risk seriously.

Three Paths for Liquidity Expansion in 2026

I am highly confident in the likelihood of US dollar liquidity expansion in 2026. Trump’s promise to keep the economy “hot” is crucial for the Republican Party’s November elections. To achieve this, the US government will rely on three main pillars to significantly expand liquidity:

First Pillar: Fed Balance Sheet Expansion

By December 2025, the Fed’s QT policy ended, and its balance sheet had bottomed out. The introduction of the RMP plan signals the start of an expansion phase. The Fed will inject at least $40 billion monthly, with further increases as government financing needs grow.

Second Pillar: Commercial Banks Increasing Lending to Strategic Industries

Data on bank lending (the “other deposits and liabilities” indicator) showed a clear rise in Q4 2025. Bank lending essentially involves “creating” deposits and money out of thin air. Major banks like JPMorgan are directly supporting government-backed enterprises, which then expand operations using these funds. The result: money supply increases, velocity accelerates, and nominal GDP grows above trend.

Third Pillar: Stimulating Real Estate via Lower Mortgage Rates

Trump’s background in real estate gives him insight into financing. He has ordered Fannie Mae and Freddie Mac to use $200 billion of their balance sheet assets to buy mortgage-backed securities (MBS). This policy injects liquidity directly into the financial system. As mortgage rates fall, ordinary Americans can refinance at record-high home equity, generating a powerful “wealth effect” that boosts consumption and asset purchases.

These three pillars work together, ensuring a substantial expansion of US dollar liquidity in 2026.

Conditions for Bitcoin’s Revival

Bitcoin and US dollar liquidity nearly bottomed out simultaneously. This is no coincidence but reflects their deep connection. As dollar liquidity expands, Bitcoin’s price is also destined to rise.

Forget Bitcoin’s sluggish performance in 2025. The liquidity environment then was unable to support crypto assets. But this does not negate Bitcoin’s long-term value—its price trend has always been closely tied to liquidity changes.

Currently, Bitcoin is priced at $68.83K, down from some institutional forecasts of over $100K. But this is the best time to accumulate. Once liquidity expansion begins, Bitcoin’s role as a “hedge against fiat currency” will be re-priced by the market, with potential gains surpassing those of stocks.

The Coexistence of Gold and Tech Stocks

Some may wonder: why can gold and tech stocks rise simultaneously? This seems to violate the common notion that “two assets cannot benefit at the same time.”

The answer lies in their fundamentally different drivers. Gold rises due to central bank strategic needs and doubts about the dollar system. Tech stocks benefit from direct government support for AI. The former is defensive asset allocation; the latter is an offensive policy-driven boost. Both benefit from global capital reallocation but through different logic.

Once the easing cycle truly kicks in, increased liquidity will favor three asset classes:

• Defensive assets: Gold continues to be favored by central banks
• Policy-supported assets: AI-related tech stocks remain strong under government backing
• Liquidity tools: Bitcoin, as the most liquid crypto asset, has enormous recovery potential

Capitalizing on the Liquidity Turning Point

As an aggressive trader optimistic about US dollar liquidity expansion, how should you position?

A practical approach is to hold shares of MicroStrategy (MSTR US) and Metaplanet (3350 JT) to leverage Bitcoin exposure. Both companies’ core assets are Bitcoin, and their stock-to-Bitcoin price ratios are currently at lows over the past two years. This means that when Bitcoin approaches $110,000, these stocks could outperform Bitcoin itself (due to embedded leverage in their capital structure).

Additionally, Zcash (ZEC) warrants attention. Currently priced at $291.54, it has retreated from its highs. Despite some development team changes earlier this year, this is not negative—new independent teams often bring more market-oriented products. For investors scared off by market sell-offs, now is a good low-entry point.

Finally, whatever your strategy, risk management must always come first. While liquidity cycles can be predicted, execution involves uncertainties. Maintaining risk awareness is key to navigating the unpredictable markets.