Global liquidity specialist Michael Howell used an appearance on the Bankless podcast to deliver a clear, if uncomfortable, message for risk assets: the post-GFC “everything bubble” is ending as the global refinancing machine rolls over, and crypto is late in that cycle rather than at the start of a fresh one.
Howell’s starting point is his own definition of liquidity, which diverges sharply from textbook aggregates like M2. “This is the flow of money through global financial markets,” he said. It is not bank deposits in the real economy, but “money that is in the financial markets… it looks at the repo markets, it considers shadow banking,” and “pretty much begins where conventional M2 definitions end.” On his Global Liquidity Index, weekly global liquidity was under $100 trillion in 2010 and now sits “just under $200 trillion” – a doubling in a decade and a half.
Howell Flags Liquidity Peak
What matters most to him, however, is not the level but the momentum of that liquidity. Howell has identified a remarkably stable 65-month global liquidity cycle that he interprets as a debt-refinancing rhythm. Capital markets, he argues, are no longer primarily about funding new investment: “Something like 70 to 80% of transactions… are debt refinancing transactions. They’re not about raising new capital.”
In that world, “debt needs liquidity for rollovers but actually liquidity needs debt,” because roughly three-quarters of global lending is now collateral-backed. The result, as he puts it bluntly, is that “ironically it’s old debt that finances new liquidity.”
To capture the systemic tension, Howell tracks a debt-to-liquidity ratio for advanced economies: the total public and private debt stock divided by the pool of refinancing liquidity. The ratio averages about two times and tends to mean-revert. When it drops well below that level, liquidity is abundant and “you get asset bubbles.” When it rises significantly above, “you start to see a stretched debt-liquidity ratio and you get financing tensions or refinancing tensions and you can see those basically morph into financial crisis.”
Right now, he says, “we’re transitioning, unfortunately, out of a period that I’ve labeled the everything bubble,” a phase where liquidity was abundant relative to debt after repeated rounds of QE and emergency support. The COVID era deepened that imbalance by encouraging borrowers to “term out” debt at near-zero rates. “A lot of the debt that then existed was refinanced back into the late 2020s at low interest rates,” he noted. That created a visible “debt maturity wall” later this decade: heavy refinancing needs now coming due into a much tighter funding environment.
Shorter-term, Howell is focused on the interaction between Federal Reserve liquidity operations, the rebuilding of the US Treasury General Account and growing stress in repo markets. SOFR, which “you’d actually expect to trade below Fed funds” because it is collateralized, has repeatedly traded above its normal range. “We’ve started to see these repo spreads blow out,” he warned, adding that “it’s not really the extent of these spikes… it’s really the frequency that’s the most important factor.” If trade fails and leveraged positions begin to unwind, “it’s going to turn quite ugly and that could be the start of the end of the cycle.”
Inside his four liquidity regimes – rebound, calm, speculation and turbulence – Howell places the US firmly in “speculation,” with Europe and parts of Asia in “late calm.” Historically, early and mid-upswings favor equities and credit, peaks favor commodities and real assets, downswings favor cash and then long-duration government bonds.
LIVE NOW – The Real Crypto Cycle: What Happens When Global Liquidity Peaks
Global liquidity veteran Michael Howell (@crossbordercap) joins to map out the “master variable” driving asset price:
A 65-month global liquidity and debt refinancing cycle that underpins booms, busts,… pic.twitter.com/Ryl3fqHoYR
— Bankless (@Bankless) November 24, 2025
The Impact On The Crypto Market
Crypto, in his work, straddles categories. “Crypto generally behaves a little bit like a tech stock and a little bit like a commodity,” he said. For Bitcoin specifically, “about 40–45% of the drivers… are global liquidity factors,” with most of the rest split between gold-like behavior and pure risk appetite.
On the popular notion of a hardwired four-year Bitcoin halving cycle, Howell is unconvinced. “I don’t really see any evidence of that four-year cycle,” he said, arguing that the 65-month global liquidity/debt-refinancing cycle is the more robust driver. With that cycle projected to peak around now, crypto looks “late stage in the crypto cycle. So it could be over but it might not be.”
The structural backdrop, in his view, is unambiguous: “The trend towards monetary inflation… is slated to continue for another two or three decades at least.” Against that, he argues, investors “have to have” monetary-inflation hedges: “It’s not Bitcoin or gold. [It’s] Bitcoin and gold.”
Tactically, though, he is cautious. “We’ve not turned bearish risk-off yet, but we are not bullish short-term,” he said – and suggested that upcoming weakness in risk assets might be “a good time to pick up some more” of those long-term hedges.
At press time, the total crypto market cap was at $2.96 trillion.
