Hold on for the next three months, and you may迎来 a crazy bull run by the end of the year.

Written by: arndxt

Compiled by: AididiaoJP, Foresight News

Ordinary labor is unimportant

"Ordinary labor is irrelevant" because in today's macro system, a weak labor market does not hinder economic growth. It only forces the Federal Reserve to cut interest rates, releasing more liquidity into the market. Productivity, capital expenditure, and policy support mean that capital continues to appreciate, even if individual workers suffer.

The importance of individual workers in production is diminishing, as their bargaining power is gradually collapsing in the face of automation and global capital expenditure.

The system no longer requires strong household consumption to drive growth, as capital expenditure dominates the calculation of GDP.

The plight of workers directly fuels capital gains. For asset holders, the suffering in the labor market is good news.

The struggles of workers will not disrupt the economic cycle. The market no longer prices for the "common people"; it now prices for liquidity and capital flow.

The market is once again driven by the following factor: liquidity.

Global M2 has soared to a historical high of $112 trillion. Over more than a decade of data, Bitcoin's long-term correlation with liquidity remains at 0.94, closer than that of stocks and gold.

When central banks loosen policies, Bitcoin rises. When they undergo liquidity contraction, Bitcoin suffers.

Let's take a look back at history.

2014-15: M2 contraction, Bitcoin crash.

2016-18: Steady expansion, the first institutional bull market for BTC.

2020-21: COVID liquidity flood, Bitcoin parabolic rise.

Currently, M2 is rising again, and Bitcoin is outperforming traditional hedging tools. We are once again in the early stages of a liquidity-driven cycle.

The supplemental funding for the TGA (Treasury General Account) in 2025 poses a greater risk than previous cycles, as the overnight reverse repurchase buffer has effectively been depleted. Every dollar raised now directly withdraws liquidity from the active market.

Cryptocurrency will first issue a pressure signal. The contraction of stablecoins in September will be a leading indicator, lighting up the red light long before stocks or bonds react.

The elasticity level is clear:

During times of stress: BTC > ETH > altcoins (Bitcoin can absorb shocks the best).

Recovery Period: ETH > BTC > Altcoins (as capital flow and ETF demand accelerate again).

Basic forecast: A volatile September to November marked by tight liquidity, followed by a stronger trend towards the end of the year as issuance slows and stablecoin growth stabilizes.

Looking at the overall situation, it becomes clear:

Liquidity is expanding.

The US dollar is weakening.

Capital expenditures are surging.

Institutions are reallocating to risk assets.

What makes this moment unique is the convergence of various forces.

The Federal Reserve trapped between debt and inflation

The Federal Reserve is in a predicament, as debt repayment costs have become unbearable, yet inflationary pressures still remain.

The yield has plummeted, with the US 2-year Treasury yield dropping to 3.6%, while commodities hover near historic highs.

We have seen such a scenario before: in the late 1970s, as yields softened, commodities skyrocketed, leading to double-digit inflation. Policymakers had few good options back then, and their choices today are even fewer.

For Bitcoin, this tension is positive. Historically, during every period of policy credibility breakdown, capital seeks inflation-resistant assets as a safe haven. Gold captured these capital flows in the 1970s; today, BTC is positioned as a more convex hedging tool.

Weak labor force, strong productivity

The labor market tells a thought-provoking story.

The resignation rate has plummeted to 0.9%, ADP employment figures are below the long-term average, and confidence is waning. However, unlike in 2008, productivity is on the rise.

Driving factors: The capital expenditure supercycle led by artificial intelligence.

Meta alone has committed to investing $600 billion by 2028, with trillions of dollars flowing into data centers, repatriating to domestic markets, and energy transition. Workers are being replaced by AI, but capital is appreciating. This is the paradox of the current economy: the real economy is suffering, while Wall Street's financial markets are thriving. The outcome is predictable, as the Federal Reserve lowers interest rates to buffer the labor market, while productivity remains vibrant. This combination will inject liquidity into risk assets.

The Quiet Accumulation of Gold

As the stock market swings and cracks appear in the labor market, gold has quietly re-emerged as a systemic hedge tool. Just last week, $3.3 billion flowed into GLD (SPDR Gold ETF). Central banks are the main buyers: 76% of central banks plan to increase reserves, up from 50% in 2022.

Measured in gold, the S&P 500 index is already in a hidden bear market: down 19% year-to-date and down 29% since 2022. Historically, poor stock performance relative to gold for three consecutive years marks a long-term structural rotation (in the 1970s and early 2000s).

But this is not a retail-driven frenzy; it is patient institutional money, strategic capital, quietly accumulating. Gold is taking on the stabilizing role that bonds and the dollar once played. However, Bitcoin remains a higher beta hedging tool.

The Decline of the Dollar and the Search for Alternatives

The US dollar is experiencing its worst half since the collapse of the Bretton Woods system in 1973. Historically, whenever Bitcoin diverges from the dollar's trend, a systemic change follows. In April, the dollar index (DXY) fell below 100, echoing November 2020, which was the starting gun for the liquidity-driven rise of cryptocurrencies.

At the same time, central banks are taking diversified measures. The share of the dollar in global reserves has dropped to around 58%, and 76% of central banks plan to increase their gold holdings. Gold is absorbing these quiet capital allocations, but Bitcoin is expected to capture marginal capital flows, especially from institutions seeking returns above passive hedging.

Recent pressure: Treasury account top-up

Note: The Treasury account replenishment refers to the actions taken by the U.S. Treasury to increase the cash balance in its Federal Reserve account (TGA), a process that withdraws liquidity from the financial system.

The Treasury account top-up is close to 500-600 billion dollars.

In 2023, ample buffers (RRP, foreign demand, bank balance sheets) mitigated the impact. Today, these buffers have disappeared.

Every dollar of the additional payment is directly withdrawn from the market. Stablecoins and the cash channel of cryptocurrencies are the first to shrink, and altcoin liquidity is exhausted.

This means that the next 2-3 months will be turbulent. BTC is expected to perform better than ETH, and ETH is expected to perform better than altcoins, but all coins will feel pressure, and liquidity risk is a real concern.

The replenishment of the Treasury account will weaken the trend, but this is just a storm in the rising tide. By the end of 2025, as issuance slows and the Federal Reserve shifts to a dovish policy, Bitcoin is expected to test $150,000 to $200,000, supported not only by liquidity but also by structural capital flows from ETFs, corporations, and sovereign nations.

Argument

This is the beginning of a liquidity cycle, during which capital appreciates while labor becomes differentiated, the US dollar weakens while substitutes strengthen, and Bitcoin shifts from a speculative asset to a systematic hedging tool.

Gold will play its role. However, Bitcoin, with its higher liquidity beta value, institutional channels, and global accessibility, will be the leading asset in this cycle.

Liquidity determines destiny, and the next chapter of destiny belongs to Bitcoin.