In 2025, different assets did very different things because they weren’t reacting to the same fundamental driver. Traditional safe haven gold and big US tech stocks went up, while Bitcoin largely lagged. The key reason wasn’t that crypto “failed” on its own merit (it was that global dollar liquidity tightened sharply, and Bitcoin is one of the most liquidity sensitive assets out there). When dollars flee, risk assets that depend on speculative capital struggle because there’s simply less fuel to drive risk on behavior. In contrast, gold’s rally was driven by central bank reserve accumulation ie China, a type of demand that doesn’t care about short term credit conditions. Meanwhile, tech stocks were buoyed by massive capital flows tied to long narratives and government aligned spending rather than pure liquidity expansion.
From a trader’s point of view, this is a classic liquidity story. Risk assets rise when credit is abundant and fall or grind sideways when credit tightens. Bitcoin, having no yield and no traditional earnings, lives and dies by the availability of dollar funding. In laymans terms, imagine risk assets as boats that need constant water under the keel. Take that water away and boats slow or stop. Gold, on the other hand, behaves more like cargo that central banks want in their vaults regardless of short term tides.
Looking ahead, the expectation in this framework is that dollar liquidity will stop contracting and start expanding again. Three mechanisms are key here: (1) the central bank’s balance sheet is likely to grow again via asset purchases, (2) commercial banks will lend more because government policy is supporting credit to strategic sectors, and (3) mortgage rates might ease because of monetary policy actions. This combination should increase the amount of money in the system, which historically has been the primary fuel that pushes risk assets (especially those without intrinsic cash flows like Bitcoin) higher. It’s not a guarantee, but it does reframe a potential bull market as a macro credit cycle rather than a narrative only story about adoption or some technical upgrades.
The deeper level insight is that markets are ultimately driven by credit and politics more than by isolated asset narratives. Markets don’t move on ideology alone. They move on the availability of money and how policy makers choose to distribute it. Understanding the interplay between central banks, commercial credit, and political incentives gives you an edge that goes beyond surface chart patterns or popular media forecasts. That means building a trading edge isn’t just about reading price action but rather it’s about reading macro regimes and anticipating how credit flows will evolve in response to political and economic reality. In that light, last year’s Bitcoin performance wasn’t a failure of crypto, it was a liquidity event, and the next phase may very well be defined by how quickly and by how much credit returns.
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