Written by: Gino Matos
Translated by: Saoirse, Foresight News
Bitcoin is entering a phase where macro trends are more important than narratives.
The stock market is near all-time highs, real yields remain high, and the credit market is expanding into increasingly opaque corners of the financial system. These conditions do not guarantee an imminent crisis, but they set the stage for high volatility in risk assets.
For Bitcoin, the key question is: will stress appear within the high-valuation financial system, and how quickly can policymakers intervene to control it?
Macro strategist Michael Pento describes the current landscape as a “triple bubble”: stock valuations approaching historic extremes, real estate being suppressed by nearly 6% mortgage rates, and private credit management reaching $2 trillion. This framing is compelling because it emphasizes the sequence of events.
If credit issues emerge first, liquidity could evaporate instantly, likely leading to Bitcoin being sold along with other assets. If policymakers step in before a crisis spreads, Bitcoin could become a high-beta liquidity trading asset, rebounding faster than traditional risk assets.
Financial systems rarely collapse solely due to overvaluation. Crashes usually occur when credit and bond markets are forced to sell assets. Bitcoin’s 24/7 liquidity means its volatility during panic and rescue scenarios is often more intense than any other asset.
Recent data shows stress signals are accumulating but have not yet triggered a collapse.
On February 23, the US high-yield bond option-adjusted spread was 2.95%, still relatively tight compared to crisis periods.
On February 18, the Federal Reserve’s balance sheet was $6.613 trillion, an increase of about $28.8 billion over four weeks, indicating mild expansion—not emergency liquidity.
On February 20, the 10-year TIPS real yield was around 1.80%, enough to pressure zero-yield assets.
Stablecoins have a market cap of approximately $308.8 billion, with a 30-day change of -0.18%, essentially flat.
Since early 2026, Bitcoin spot ETF funds have outflowed about $2.6 billion, with nearly $4.3 billion in outflows over the past five weeks.
Bitcoin’s price decline first—reasons to follow later.
Deflationary liquidations often start in the credit markets, not stock indices.
A sharp widening of high-yield spreads, pressure on financing markets, and soaring volatility make cash the only desired position.
Bitcoin’s behavior in such phases is predictable: perpetual funding rates turn negative, leverage liquidations cause holdings to plummet, liquidity exits lead to shrinking stablecoin supplies, and ETF outflows accelerate.
March 2020 is a typical example. During the global liquidity shock, Bitcoin plunged nearly 40% on March 12, along with stocks, credit, and commodities, as market participants franticly sought dollar liquidity.
A credit-driven liquidation can cause Bitcoin to fluctuate -20% to -40% within days.
In early February 2026, VanEck noted Bitcoin futures open interest peaked above $90 billion in October 2025, then reduced leverage by over 45%. If credit stress intensifies, further forced selling remains possible.
Moody’s projects private credit management will exceed $2 trillion in 2026, approaching $4 trillion by 2030. Reuters reports US banks have invested $25 billion in this sector.
This growth concentrates credit risk in less transparent, longer lock-up, and weaker contractual structures.
If a credit event forces private credit portfolios to sell assets, a chain reaction can occur through margin calls and collateral pressures impacting public markets. Bitcoin, as the most liquid and 24/7 traded risk asset, disproportionately bears the brunt.
Bitcoin futures open interest, which peaked above $90 billion in October 2025, has fallen by about 45% by early February 2026, down to levels seen in late 2025. Meanwhile, Bitcoin’s price dropped from around $68,000 to near $60,000, then rebounded to about $67,000.
Bitcoin will front-run policy rescue efforts.
The opposite scenario begins with clear policy support.
Fed balance sheet expansion, emergency tools, and declining real yields. Bitcoin’s response in this environment is also predictable: funding rates and basis normalize, liquidity return boosts stablecoin supply, ETF outflows stabilize or turn positive, and holdings rebuild.
In a clear rescue environment, Bitcoin often acts as a high-beta liquidity asset, rebounding faster than traditional risk assets because it has no credit risk or earnings surprises. It benefits from declining real yields as a form of liquidity rights for fixed-supply monetary assets.
The banking turmoil of March 2023 exemplifies this. As market expectations shifted toward easing, Bitcoin surged 26% in a week, about 40% in ten days, preempting the Fed’s ultimate liquidity support.
In February 2026, Bitcoin soared from about $60,000 to over $70,000 in a single day—the largest daily gain since March 2023—highlighting that macro risk sentiment remains the dominant driver during stress windows.
In March 2020, Bitcoin and all assets crashed, but the Fed cut rates to zero, launched unlimited QE, and set up emergency lending facilities within weeks.
Bitcoin recovered from the March 12 lows and rose fivefold over the following year, driven by persistently negative real yields and expanded fiscal spending.
The lesson: Bitcoin’s reaction beta to liquidity cycles is nearly higher than any other asset, and timing is more critical than narratives.
A flowchart illustrates three potential paths for Bitcoin under triple bubble pressure: credit collapse causing 20-40% sell-offs, policy rescue triggering high-beta rebounds, or stagflation causing price swings amid safe-haven and currency devaluation narratives.
When neither path dominates:
The most chaotic scenario is persistent inflation, bond markets demanding higher term premiums, and elevated real yields, limiting policymakers’ ability to quickly rescue without reigniting inflation fears.
In this environment, Bitcoin may oscillate sideways. Safe-haven and devaluation hedging narratives pull in opposite directions. When real yields stay high or policy support falls short, rebounds fade.
The 10-year TIPS yield at 1.80% is well above zero or negative real yields seen during Bitcoin’s strongest rallies.
Freddie Mac’s 30-year fixed mortgage rate averaged 6.01% on February 19.
The Buffett indicator (total market cap / GDP) is about 206%, the highest on record, according to Advisor Perspectives. This suggests that unless earnings grow or discount rates fall, stock valuations have little room to expand further.
If credit stress emerges but policymakers do not pivot quickly, Bitcoin could enter a prolonged sideways phase without forced liquidations or rescue.
Tracking market shifts with a simple weekly framework:
- Changes in Fed assets over 4–8 weeks;
- 30-day stablecoin market cap variation;
- 2–4 week high-yield spread movements;
- 2–4 week changes in 10-year real yields.
When these indicators weaken significantly, Bitcoin tends to behave like a high-beta asset during liquidity events.
When they improve and inflation expectations rise, Bitcoin often outperforms the broader market.
Current readings show a neutral-to-bearish liquidity environment:
- Slight expansion in Fed balance sheet but no large-scale easing;
- Stablecoin supply flat or slightly declining;
- Credit spreads still tight;
- High and stubborn real yields;
- Continuous outflows from Bitcoin spot ETFs;
- Derivatives open interest nearly halved from peak levels.
The market is waiting for a catalyst: either credit stress triggers a liquidation or policy support reinitiates liquidity trading.
Signals in the credit chain:
Operational monitoring focuses on credit and crypto’s underlying chain:
- High-yield spread rising from lows → declining credit confidence;
- US bond volatility and term premiums increasing → bond market pricing policy constraints;
- Fed balance sheet stable or shrinking while spreads widen → no backstop.
Crypto signals:
- Large holdings decline → forced selling;
- Stablecoin market cap shrinking → liquidity leaving;
- ETF outflows → institutional risk aversion.
Confirmation of rescue:
- Significant weekly increase in Fed assets → active liquidity provision;
- 10-year TIPS yield falling → declining real yields;
- Stablecoin supply growth + normal derivatives funding rates → crypto liquidity returning.
The shift from liquidation to rescue can happen rapidly. March 2020 exemplifies this: Bitcoin first plunged then rebounded within weeks as policy support was implemented.
The triple bubble theory’s greatest value isn’t predicting crises but providing a sequence framework:
- Credit collapse triggers liquidations, leading to Bitcoin being sold cheaply;
- Policy rescue causes liquidity surges, with Bitcoin front-running traditional assets.
The current macro landscape—overvalued assets, high real yields, tight credit spreads, stablecoin supply steady, ETF outflows—indicates the market has priced in pressure but has not yet experienced a credit chain collapse forcing sales.
Bitcoin’s next big move depends not on whether bubbles exist but on whether credit breaks first or the Fed intervenes to rescue.
