Bitcoin's Decline Linked to Liquidity Shortage, Not Strategy

Crypto analyst Jamie Coutts has disputed claims that Michael Saylor's company Strategy is behind Bitcoin's recent decline. Speaking on Michaël van de Poppe's podcast, Coutts argued that weak demand and tightening global liquidity are the main drivers of Bitcoin's weakness.

The data shows that despite holding large Bitcoin holdings and making debt-funded purchases, Strategy did not cause the market peak or subsequent decline, according to Coutts. He pointed out that the broader market simply lacked enough buyers to sustain higher prices.

Coutts also noted that long-term holder activity peaked during the third quarter of last year, a pattern often associated with the later stages of a market cycle. This led him to believe that his own risk model may have signaled the top of the entire cycle, rather than just a 30% to 40% correction as he initially thought.

Coutts identified rising US government debt as the largest structural concern, which is expanding faster than available liquidity and creating an imbalance that will eventually require a policy response. He expects new money to return to financial markets either this year or next, but warned that conditions could deteriorate further before liquidity begins improving.