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Macro guru Lyn Alden believes global liquidity will continue to rise in 2025 but it likely won’t be as explosive as the surges witnessed in previous years.
In a new interview on the Less Noise More Signal YouTube channel, the analyst says she expects global liquidity – which has historically been correlated with risk assets like Bitcoin (BTC) – to rise more than it did in 2022, but less than in 2017 or 2021.
Instead, Alden sees a steady grind up for liquidity in 2025 rather than a parabolic move.
“I don’t really expect an explosive 2025. I think liquidity conditions are not this big vertical liquidity party, but I do think 2022 [was] a particularly bad year for liquidity – that was an awful year for liquidity – it stabilized in 2023 and 2024 [and is] gradually inching back up.
I think that 2025 is either continuing to gradually inch up or could inflect a little bit more quickly up but I wouldn’t necessarily expect fireworks.”
Alden says that so much debt is already locked in at lower costs from when interest rates were near zero in 2020 and 2021, meaning that the lowering of rates now doesn’t entice as much refinancing and investments as it normally would.
“There are pockets of the US economy that are slowing and rate cuts are not very effective at addressing those for a couple reasons – one is that so much debt is already locked in at lower rates anyway so unless you’re willing to like cut all the way to zero – which I don’t think is going to happen – it doesn’t really encourage a lot of new refinancing and things like that.
And two, sometimes when you cut the short end, the long end doesn’t go down or goes up, and that’s actually what a lot of people are borrowing, it is the longer end.”
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