Why the 4-Year Cycle Is Dead (Lessons from My Mistakes!) Part 01: US Net Liquidity Another metric showing we are at the bottom and operating in a different environment than before is US Net Liquidity. One key reason why cycles (liquidity, debt, credit, economy – and therefore crypto) have become significantly longer: The yellow line below represents US Net Liquidity (FRED data): the ratio of US M2 money supply to US debt. We are in the endgame of the 100+ year overarching debt supercycle – and this is the longest downward phase without any interim spike since Bitcoin's inception. What does this mean? Since late Q3 2021, liquidity in the US market has been steadily declining. Remarkably: the entire Bitcoin bull run so far has occurred during strong and sustained falling liquidity. A situation never seen to this extent before. There was a moderate, gradual increase from late 2024 to mid-2025 (the period when I mistakenly called the start of Altseason). But it was never a sharp spike. The yellow bars mark historical phases of sharp, uninterrupted rises in US Net Liquidity. Pattern observed: Every such sharp rise occurred at the beginning of – or during – a parabolic move, right up to the cycle top. That’s exactly why I (wrongly) expected a parabolic phase starting late 2024 / early 2025: - US Net Liquidity (and other metrics) began rising, including globally - The timing seemed to fit perfectly into the 4-year cycle framework - Macro conditions started improving My main mistakes: - The liquidity increase was only moderate, not sharp - I relied too heavily on the 4-year cycle for timing - Macro conditions were not fully supportive The tricky part: Last year’s liquidity rise, followed by the subsequent drop, superficially fits the old pattern, making it easy to mistakenly believe the 4-year cycle is still intact. In previous cycles, when liquidity moved sideways and then dipped further, the bear market had typically already ended (or was very close to ending). Complicating matters further: since 2021/2022, the US government and FED have introduced various new facilities (BTFP, etc.) to provide banks with liquidity and collateral support – interventions that do not directly appear in the classic US Net Liquidity metric. Accept the fact, that the evironment has changed. Accept the fact, that Bitcoin rised, because the big boys are taking over, not because the 4-year-cycle will be there forever. Accept the fact, that this time is not different – Bitcoin behaves differently because the environment changed. The correlations are still the same.
