Bitcoin, Gold and the Global Liquidity Cycle

Summary

The February 24, 2026 episode of the Archie Podcast features Andre Dragosch analyzing why Bitcoin has halved from its October 2025 peak despite strong institutional demand and continued global liquidity. He explains how this cycle’s bull market unfolded while US manufacturing indicators remained in contraction, contrasts Bitcoin’s US-centered demand with China-driven strength in gold, and examines the growing role of ETFs and sovereign actors. The conversation highlights open questions about whether Bitcoin is flashing a genuine macro warning, how de-dollarization and Chinese reflation are reshaping hard-asset markets, and where Bitcoin fits in future reserve and portfolio strategies.

Take-Home Messages

1. Business-cycle decoupling: Bitcoin’s recent bull market occurred while US manufacturing indicators stayed in contraction, breaking with earlier cycles where price gains aligned with economic expansions.
2. Macro signal or mispricing: A 50% drawdown alongside ongoing liquidity growth leaves open whether Bitcoin is warning of recession or trading at a significant macro discount.
3. Institutional market structure: Spot ETFs, exchange-traded products, and treasury-style buyers now dominate flows, making ETF creations and redemptions central to Bitcoin’s short-term volatility.
4. Gold, China, and de-dollarization: Chinese reflation and accelerating central-bank moves out of dollar reserves into gold are driving metals higher and redefining the landscape into which Bitcoin must compete.
5. Portfolio and reserve implications: Evidence that Bitcoin diversifies bond risk better than gold, combined with early sovereign and public-sector allocations, suggests a growing role in institutional portfolios and future reserve architectures.

Overview

Dragosch begins by noting that Bitcoin climbed from roughly $15,000 to $126,000 while the US ISM manufacturing index sat below the 50-point contraction line for nearly four years. He argues that previous cycles, where Bitcoin rallied alongside business-cycle upswings, encouraged investors to over-attribute prior bull markets to the halving schedule. In his view, the closer fit is between Bitcoin’s deviations from its long-term adoption trend and the business cycle, which now appears to be recovering from a tariff-induced trough in early 2025.

He then outlines how central banks responded to elevated policy uncertainty, tariff shocks, and brief regional conflict by cutting rates aggressively, producing the largest synchronized easing since 2009. Global money supply growth remains strong, and the steepening US yield curve signals renewed bank incentives to create credit rather than a looming liquidity crunch. Dragosch emphasizes that, unlike the liquidity contractions of 2019 and 2022 that aligned with major Bitcoin bear markets, today’s environment still looks supportive on most forward-looking indicators.

Turning to market structure, Dragosch explains that this cycle’s demand has been led by ETFs, exchange-traded products, and treasury-style corporate buyers while retail activity in searches and online engagement remains muted. ETF flows and the market makers that hedge them now drive a large share of spot trading, with redemptions forcing concentrated selling that often shows up as sharp moves around specific US trading hours. He stresses that ETF share turnover on traditional exchanges has displaced much speculative activity that previously showed up in on-chain metrics, leaving many on-chain indicators structurally lower since January 2024.

Dragosch situates Bitcoin within a wider hard-asset regime defined by Chinese reflation, a multi-year gold breakout, and rapid de-dollarization of central-bank reserves. He notes that Shanghai has effectively become the center of gravity for physical gold pricing, while Bitcoin remains anchored in US exchanges and ETF platforms. Against this backdrop, he argues that gold price surges have repeatedly led Bitcoin rallies by several months, that portfolio data show Bitcoin diversifying bond risk more effectively than gold, and that early allocations by sovereign wealth funds and smaller central banks could set the stage for broader public-sector adoption despite ongoing debates about volatility and quantum risk.

Implications and Future Outlook

If Bitcoin’s current drawdown reflects macro mispricing rather than an impending downturn, investors who rely on it as an early-warning indicator could misjudge the resilience of the post-2025 expansion. Dragosch’s emphasis on still-rising global money supply, a steepening yield curve, and only mild tightening in risk premia suggests that macro conditions in 2026 may remain more supportive than price action implies. At the same time, correlations with high-growth equities and software stocks mean that any future reversal in the AI and technology boom could transmit quickly into Bitcoin via risk-off flows.

The growing split between a China-centered gold market and a US-centered Bitcoin market will shape how de-dollarization and sovereign portfolio shifts play out over the next decade. As central banks recycle reserves out of Treasuries and dollars into gold, the total addressable market for non-sovereign hard assets expands, creating more room for Bitcoin to capture share if and when institutional constraints loosen. ETF-driven infrastructure, sovereign wealth fund experiments, and continued sovereign holdings all increase the probability that Bitcoin will transition from a niche risk asset toward a more regular component of reserve and asset-allocation frameworks, provided market-structure vulnerabilities and perceived technical risks such as quantum computing are addressed in time.

Some Key Information Gaps

1. How accurately does Bitcoin’s recent 50% drawdown predict the likelihood and severity of a future US or global recession? Clarifying this would determine whether policymakers and investors can treat Bitcoin as a useful macro barometer or should view current pricing as a temporary dislocation.
2. How does the growing dominance of ETFs, exchange-traded products, and treasury-style buyers affect Bitcoin’s volatility and sensitivity to redemption shocks? Answering this is important for understanding new sources of systemic risk, feedback loops, and intraday stress in an ETF-led market structure.
3. How much of recent gold price appreciation can be quantitatively attributed to Chinese credit expansion and liquidity injections? A robust estimate would sharpen analysis of how non-US monetary policies move global hard-asset prices and define the competitive field for Bitcoin.
4. How does adding a small Bitcoin allocation to a traditional bond-heavy portfolio compare with adding gold in terms of drawdown mitigation and risk-adjusted returns? This comparison is central for large institutional allocators tasked with improving portfolio resilience without taking unacceptable headline or regulatory risk.
5. How do early public-sector Bitcoin allocations by smaller sovereign wealth funds or central banks influence the decisions of larger, more conservative institutions? Understanding these signaling dynamics would help anticipate tipping points in reserve management norms and cross-border monetary arrangements.

Broader Implications for Bitcoin

Bitcoin as a Macro Barometer

If Bitcoin price deviations from long-term adoption trends correlate tightly with business-cycle indicators, its market could become an informal but widely watched macro gauge. Policymakers and risk managers may increasingly monitor Bitcoin alongside survey data such as manufacturing indices to triangulate shifts in sentiment and liquidity. Misreading that signal, however, could lead to either premature tightening or excessive risk-taking if structural demand drivers diverge from cyclical dynamics.

Shifting Reserve and Hard-Asset Architectures

Accelerating de-dollarization and sustained central-bank gold accumulation signal a gradual move toward more diversified reserve structures that lean on hard assets. In such an environment, Bitcoin’s combination of scarcity, bearer settlement, and global transferability positions it as a candidate complement rather than a simple substitute for gold. Over a three-to-five-year horizon, incremental sovereign experiments could normalize Bitcoin in reserve discussions, especially if gold’s expansion continues to demonstrate the available demand.

ETF Infrastructure and Market Stability

Bitcoin’s integration into ETF and ETP platforms aligns it with existing institutional plumbing but introduces new channels for stress transmission. Concentrated creation and redemption windows, predictable hedging behavior, and time-of-day liquidity patterns can magnify short-term volatility and complicate on-chain analytics. Designing market-structure safeguards and transparency norms around these products will be key to avoiding self-reinforcing sell-offs as allocations grow.

China–US Monetary Competition and Neutral Settlement

A world in which China effectively anchors physical gold pricing while the United States anchors Bitcoin trading sets up a dual hard-asset landscape shaped by geopolitical competition. As trade frictions and sanctions proliferate, both blocs have incentives to experiment with more neutral settlement media that reduce reliance on each other’s sovereign liabilities. Bitcoin’s borderless design and auditability make it a plausible candidate in such arrangements, but only if liquidity deepens across jurisdictions and governance debates preserve its credibly neutral status.

Institutional Adoption and Protocol Governance Pressure

Rising ownership by ETFs, asset managers, and public institutions inevitably increases the political and economic stakes around Bitcoin protocol decisions. Large holders can fund development, shape narratives on topics such as quantum resistance, and implicitly signal preferences for particular upgrade paths or forks. Over time, the system’s checks and balances among node operators, miners, developers, and users will be tested by how well they absorb this influence while maintaining security and broad legitimacy.