Summary Bitcoin has experienced a ~30% drawdown, but this correction is driven by macro liquidity tightening, not structural network issues. BTC’s price correction diverges from global liquidity trends, with recent data showing liquidity improving and institutional investors returning at the $90k support level. Major companies like MSTR, COIN, and HUT are accumulating BTC, signaling renewed institutional confidence and support for current price levels. I reiterate my Buy rating on BTC, viewing the current pullback as a liquidity reset and an attractive entry point for strategic investors. Investment Thesis It is hard to watch an asset lose ~30% of its value, from peak to trough, especially when that value is lost in just over a month. These kinds of drawdowns shake the confidence of investors who are caught between the fundamental basis of their expectations and the materiality of value depreciation. What makes it harder is that the asset I'm writing about is Bitcoin ( BTC-USD ), the mothership of crypto assets, which will attract unwanted attention at times like this when ~30% drawdowns occur. However, what makes this drawdown in Bitcoin different from most of the past corrections is that there is no structural issue in the Bitcoin network or the investing case for Bitcoin. As I argue below, this particular correction in Bitcoin can be tied to the tightening in the macro liquidity environment, which has caused many investors to pare back their exposure to Bitcoin. This shakeout has most likely caused a reset in Bitcoin’s outlook, allowing new investors to get back at current levels, which are strongly expected to support Bitcoin’s price levels here, and I reiterate my Buy rating on Bitcoin. Liquidity Showing Up For Risk Assets & Crypto Bitcoin is up ~16% since my coverage in April this year , despite the significant drawdowns in Bitcoin’s price. In April as well, I noted my reasons why “liquidity is one of the key indicators I look for when assessing my outlook on Bitcoin.” In that post I cited research that showed Bitcoin and global liquidity had an 83% correlation in any rolling 12-month period. What makes this particular drawdown in Bitcoin different, in a marginal way, is the behavior of Bitcoin’s price versus liquidity. Bitcoin’s price has pulled back severely in advance, assuming that there could be a significant contraction in global liquidity, especially in the y/y supply of M2 money in the US. So far, we still have September’s US M2 data with us, which shows US M2 money grew 4.5% to $22.2 trillion. But as can be seen below, investors have pulled back aggressively with concerns mounting about slowing M2 growth. Exhibit A: Bitcoin’s price versus the y/y change in US M2 money supply. (yCharts) One of the first triggers for Bitcoin’s price to fall last month was the return of trade uncertainty that came back to cloud the narrative for cryptocurrencies much like it did during Q1 of this year, as I explained in my April post on Bitcoin. In addition, the 43-day US shutdown, the longest in US history, complicated the overall liquidity situation in the US further. The US TGA (Treasury General Account), otherwise also loosely known as the US government’s checking account, saw its levels rise sharply ~30% in October, after already more than 2x between July and September this year. The US government was already building up its TGA account levels through Q2, and the US shutdown completely closed the tap in the TGA. This is important because the US draws out money from the TGA for their sovereign expenses, which is one of the primary factors to boost the liquidity situation in the US. The shutdown formally ended on Nov 12, and the Nov 13th US reserve balances report showed the earliest signs of some kind of normalization beginning and potential billions of dollars finding their way from the US TGA into the US financial plumbing, a plus for crypto assets. Exhibit B: US TGA levels surged to almost a trillion dollars this year, its highest level since 2021. (FRED) In addition, minutes of meetings from the FOMC show that the Feds have voted to end QT (quant tightening) as soon as next month. This is another way for an additional dose of liquidity injection into the US financial system, which is actually going to be extremely beneficial for risk assets like Bitcoin. As noted in this opinion post , US Feds are attempting to be as forward-looking as possible and avoid a 2019-style reserve-scarcity crisis by keeping borrowing costs down and liquidity streams flowing, especially after the US shutdown that just ended. At a global level as well, the Japanese yen has fallen to new lows against the US dollar, with expectations that the new Japanese administration will inject liquidity into their macro system via fiscal stimulus spending packages. A weak yen is a strong indicator for “risk-on” trades to commence, setting the path for a strong rally to return in Bitcoin before this year's end. As can be seen below, global M2 liquidity has actually been rising since September, with global M2 notching its highest y/y gain for 2025 at 8.8% as of Nov 17th. Exhibit C: Bitcoin’s price vs global M2 y/y change updated through Nov 17. (B2Geometrics) Unfortunately, Bitcoin investors, especially large Bitcoin whales , chose to be net sellers over the past month and a half, selling off Bitcoin as fears about global trade uncertainties returned last month while concerns about liquidity strains limited investors’ visibility to observe actual uptrends in the global M2. But based on my latest data points, I am seeing this sentiment already change in the last few days as investors are returning to scoop up Bitcoin at the $90,000 level, which provides a strong support region for Bitcoin. Exhibit D: Investors are returning to scoop up Bitcoin around the $90k mark. (Glassnode) In addition, larger investors are also returning, with treasury companies also adding to their respective Bitcoin treasuries at these levels. Companies like Strategy Inc. ( MSTR ), Metaplanet, Coinbase ( COIN ), and Hut 8 Mining ( HUT ) have begun buying Bitcoin at these levels, which is a strong indicator of institutional investors returning to support Bitcoin. From a valuation standpoint, I maintain that it is difficult to value Bitcoin since the Bitcoin network does not generate cash flows or earnings. This will create a misunderstanding among speculative investors, but for other investors looking to gain exposure to Bitcoin, the current price levels in Bitcoin represent a very attractive opportunity, in my opinion. Exhibit E: Bitcoin’s price rests at a fundamentally strong uptrend support level that has been respected for over 10 years. (TradingView) As seen in the chart above, Bitcoin’s price now rests at a section of an uptrend support that has been respected for over a decade. With buyers coming in here, I fully expect this support level to be respected, converging with the influx of liquidity coming in in the US and at a global level. Risks & Other Factors To Note With the US shutdown done and dusted, investors must monitor trade situations unfolding and changing rapidly. Any clawback in global liquidity conditions or even a hint of it will turn risk-on investors bearish again, which will impact Bitcoin’s ability to move higher from current levels. Takeaway In my view, current price levels in Bitcoin should be seen as potentially attractive for strategic investors looking to gain back exposure into crypto and participate in a global liquidity environment that is only going to improve from here. Investors should view this pullback as a divergence from the strong uptrend in global liquidity growth, implying the current correction in Bitcoin prices is a liquidity reset, not a loss of confidence in the risk asset. Plus, the return of larger investors and financial institutions buying Bitcoin at the current price levels of $90k-ish is one of the strongest and earliest macro anecdotes that an investor can take away when deciding whether to enter at current BTC levels. I reiterate my Buy rating for Bitcoin and am continuing to add Bitcoin to my exposure.
