Share this page!

Enter URL or ID to Unroll

You can paste full URL like: https://x.com/threadreaderapp/status/1644127596119195649
or just the ID like: 1644127596119195649

How to get URL link on X (Twitter) App

  1. On the Twitter thread, click on or icon on the bottom
  2. Click again on or Share Via icon
  3. Click on Copy Link to Tweet
  4. Paste it above and click "Unroll Thread"!
  5. More info at Twitter Help
Capital Flows Profile picture
@Globalflows
Sep 21 • 11 tweets • 4 min read • Read on X
The liquidity flowing into crypto has more to do with the fact that the US/China relationship than it does with the Fed or "money printing."

If you understand the drivers, the next bear market won't catch you off guard 🧵
Crypto, Bitcoin, Gold, and Silver are ALL release valves for macro liquidity. I laid this out in the thread here for the current performance and BTC educational primer
The flows of liquidity are linked to credit risk and duration risk:

see these threads

-here: x.com/Globalflows/st…
-here: x.com/Globalflows/st…
-here: x.com/Globalflows/st…
-here:
People always focus on whatever source of liquidity is most politically charged in the moment. So think about, people focus on the Fed, then government spending, then treasury companies and then ETF flows. But no one seems to know WHERE all this money comes from.
Fundamentally, the dollar devaluation narrative people use for Bitcoin falls apart when you try to predict the price to impose a definition of what money actually is.

There are no rules for what money "should be"

All of this frames how the US China relationship connects to crypto. I already laid out the framework here:

Under the current international monetary system, many countries—especially China—run persistent trade surpluses with the U.S. to sustain growth through exports. To keep their currencies from appreciating (which would hurt exports), they:

- Intervene in FX markets (sell their currency, buy dollars),

- Accumulate dollar-denominated assets (primarily U.S. Treasuries, but increasingly others),

- Suppress domestic consumption to support production.

This creates a global glut of savings—primarily dollar-denominated capital—looking for places to park and grow.
Crypto is uniquely positioned to absorb and reflect the marginal flows of global liquidity, because:

- It’s unregulated, borderless, and dollar-settled,

- It reflects expectations about fiat debasement and monetary excess,

- It’s accessible to foreign capital locked out of traditional markets.

Thus, cross-border flows from global savers—especially from surplus countries like China—can end up in:

- Bitcoin and Ethereum (as long-duration digital assets),

- Stablecoins (as offshoring vehicles and dollar proxies),

- Altcoins and crypto equities (as speculative leverage vehicles).
This creates a global capital feedback loop into crypto that’s orthogonal to the Fed’s balance sheet. Even if the Fed isn’t easing, capital seeking returns or hedges against debasement will push into crypto via global liquidity spillovers.

There is a reason why Bitcoin rallied so much in lockstep with Chinese equities in 2017

It didn't have anything to do with the Bitcoin halving; it was macro liquidity from the largest balance of payments imbalance we have ever seen in history Image
As I explained in this report, the next bear market isnt likely to be driven by the Fed, it will be driven by crossborder flows as everyone is distracted by Fed watching

• • •

Missing some Tweet in this thread? You can try to force a refresh
　

Keep Current with Capital Flows

Capital Flows Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @Globalflows

Capital Flows Profile picture
Sep 22
THE CREDIT CYCLE IS BEING AMPLIFIED, NOT MANAGED

Both fiscal and monetary policy have turned procyclical, feeding the same direction of the cycle rather than stabilizing it

This reflexive loop between the economy and markets is why the risks ahead are so misunderstood🧵 Image
The biggest misconception about the market is that it reflects the underlying economy. This has ZERO evidence.

The economy and financial markets are self-reinforcing.

- Asset prices drive spending/credit → policymakers react → that reaction reinforces asset prices.

- Reflexivity means market prices don’t just reflect fundamentals, they shape them.
When credit spreads are at cycle lows, every single business wants to take out cheap debt and leverage up because competitors are doing the same thing. In a bull market, you can't afford to NOT take out leverage because a competitor can leverage up and crush you on the upside so youre not even around to weather a recession. This exists in the economy and with real returns in the stock marketImage
Read 12 tweets
Capital Flows Profile picture
Sep 20
The periods of green in the charts below are when gold & silver outperform Bitcoin

This is one of the most important relationships to understand because Bitcoin is in the process of being financialized

If you understand HOW the market is evolving, the next move makes sense 🧵 Image
Image
In the Bitcoin playbook, I explained how Bitcoin is a release valve for macro liquidity:

Bitcoin has a stronger connection to the risk assets and risk curve which is why it is correlated with equities

gold and silver are different, which is WHY they are outperforming right nowcapitalflowsresearch.com/p/research-syn…Image
Earlier this year we saw equities (and Bitcoin) sell off as gold rallied. Why did this happen though? It is because the driver of the sell off didnt have to do with an internal domestic recession driven by delinquencies but an external balance of payments risk Image
Read 15 tweets
Capital Flows Profile picture
Sep 19
The current administration is addressing the actual imbalances that exist from the dollar's reserve currency status

@SteveMiran is now in a position of influence on the political side and the monetary side

This has implications for politics, markets, the Fed, and midterms🧵 Image
The current account in the US has been in free fall for years now which represents the entire import/export relationship.

In simple terms, the US imports way more than it exports. Image
The system incentivizes other countries to suppress consumption at home in order to run trade surpluses and build dollar reserves:

- Countries like Germany and China deliberately depress wages and household consumption to create large savings surpluses.

- These surpluses are exported in the form of capital outflows, which must be matched by U.S. capital inflows and thus trade deficits.

- This means American workers and firms are systematically undercut by foreign producers with artificially low costs, worsening inequality in the U.S.
Read 20 tweets
Capital Flows Profile picture
Sep 19
As we progress into the end of September, there are several critical things to reflect on and look forward to in order to understand WHERE we are in the macro regime

The credit cycle is causing equities to melt up, but risks are building

Let's dig in 🧵👇
First, as we came into the month of September, everyone was predicting a lower stock market because of the arbitrary seasonality. As I laid out in this video, this was HIGHLY unlikely given the macro flows.

If you don't know why a seasonality effect is taking place, you have no edge in monetizing it.
Second, the credit cycle remains in full force and will ALWAYS outweigh seasonality if the macro catalysts are aligned for positioning to readjust. We saw this exact thing from FOMC this past week. The most important video I've recorded this month showed that the Fed is clearly cutting into resilient growth and inflation above 2%. This inherently increases the probability of inflation as opposed to recession.
x.com/Globalflows/st…
Read 13 tweets
Capital Flows Profile picture
Sep 18
The Russell is setting up for an imminent breakout to all-time highs

This is on the back of the Fed rate cut and is hurling the market toward an unsustainable melt-up

This will set the stage for larger risks

Here is the full playbook for navigating it: 🧵👇 Image
We have been in a melt-up with the Russell for a while now because the curve is steepening as real rates are falling. In simple terms, nominal growth remains positive and liquidity is increasing.

When real rates are falling into positive growth, risk assets fuction as a release valve and capital moves out the risk curveImage
This is why we have seen a convergence of all these factors post FOMC which I noted in the video breakdown and connected playbooks here
Read 22 tweets
Capital Flows Profile picture
Sep 16
The macro regime is confounding bears and chopping up those who think dollar devaluation is the only trend

The moves we are seeing in the dollar, gold, Bitcoin, and equities as we move through retail sales continue to reflect this

All of this is setting up for a bigger move 🧵
I laid out the logic for the macro regime and explained WHY the probability of a recession remains low. On top of this, we are seeing a massive divergence between the Fed and ECB right now.
In simple terms, retail sales showed everyone that a recession is NOT on the table right now.

MoM showed continued expansion reflecting resilience in growth as the Fed cuts rates. Image
Read 13 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

Send Email!

:(