The Truth About The Gold-Bitcoin Rotation

"And when this speculation runs out and the leverage unwinds, gold's price could fall sharply. As I just explained, this fall would be due to force sales from risk on investors and it could correspond to another leg lower in the crypto market, not rotation."

"In case you didn't notice, what follows the liquidity peak is a liquidity drawdown which is bearish for all assets. That's because there's a scramble for cash. Hence why cash is the asset to hold at that phase. What's fascinating is that how believes that the global liquidity cycle is driven by the debt refinancing cycle. In short, individuals and institutions around the world need to roll over their debts every four to 5 years. This rolling over of debt causes liquidity to fall in the same way that paying off your entire credit card balance means that you have less money left to spend on other things. Imagine that, but on a global scale. Now consider that the world's wealthiest individuals and institutions keep as much money in assets as they possibly can. Be they stocks, crypto, or precious metals. When it's time to refinance their debts, they must sell these assets for cash. Which is again why framework suggests holding cash during a liquidity contraction. And in case it wasn't clear enough, liquidity is expected to contract in 2026. This is just because there's a huge debt refinancing wall in 2026."

"So, when the DXY eventually rises as debts are refinanced sometime in 2026, gold's price will likely fall, causing speculative capital to flee and triggering liquidations, pushing prices down even more."

"Meanwhile, crypto prices are also likely to fall, not because gold is falling, but because the liquidity drain caused by debt refinancing is creating a riskoff environment that's pushing down gold's price due to risk on investors getting out of gold."

"The silver lining is that even though the price of everything will fall when liquidity contracts, gold's price should fall less than other assets in percentage terms as risk off investors increase their allocation to gold during the drawdown."

"When you remember that crypto lags liquidity by 3 months, you understand there could be a small rally sometime in Q1 2026. And when you combine this increase in liquidity with the potential approval of the Clarity Act, it means that attention and capital could rotate into the crypto market."

"After that small rally though, the crypto market is likely to fall as liquidity is drained due to the debt refinancing wall, which I'll remind you can be tracked by looking at what the DXY is doing."

"So, be sure to keep that in mind in 2026. And yes, once that emergency stimulus is announced, expect to see crypto prices start to recover around 3 months later."

"And yes, gold will probably bottom around the same time the crypto will, just like it did in 2018 and 2022."