Bitcoin And Global Liquidity: Part 2

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Debt dominates. Under the sway of excessive debt, the financial system has shifted from raising new capital to predominantly refinancing existing debt, with about 75% of transactions now involving debt rollovers this creates a dependency on collateral (e.g., Treasuries, high-quality bonds) and balance sheet capacity, i.e. Global Liquidity. We believe that the financial system is trapped in a debt-refinancing loop, where collateral shortages and rollover risks (not just credit risk) drive crises, not mispriced risk. Policy makers need to continually expand liquidity. Hence, the attractions of owning hedges against currency debasement, like Bitcoin and gold. Liquidity a cycle and a trend. With term premia rising, 5% yields may persist, and investors must adapt to a world where the Fed’s reaction function is being increasingly reshaped by stagflationary forces.