Michael Howell Says 2026 Won't Be A Big Year For Bitcoin, Sees 30-Year Yield Going Higher

• According to Michael Howell, Bitcoin tracks wholesale financial market liquidity rather than conventional M2.
• Howell stated that AI capital expenditure and a significant U.S. deficit were the reason for which Bitcoin's price saw a drawdown.
• He believed that the global liquidity cycle will reach its lowest point in 2027, which would give more room for Bitcoin's growth.

Cross-border capital founder and well-known liquidity expert, Michael Howell, believes that investors monitoring global M2 have misread Bitcoin's recent weakness. He argued that the cryptocurrency responds to wholesale liquidity flowing through financial markets rather than retail bank deposits.

On the Bitcoin news channel podcast, Howell explained that the growing gap between Global M2 and Bitcoin's price is a definitional issue rather than a signal. "M2 is not the metric to look at. It often gives very, very false signals. We don't use it in any of our work," he said, adding that M2 is more appropriate for describing activity in the real economy than financial assets.

M2 is the U.S. Federal Reserve's estimate of liquid assets, which includes anything from cash on hand, money deposited in checking and savings accounts to other short-term savings vehicles, such as money market funds and certificates of deposit.

Liquidity Crowded Out

Howell stated that declining global liquidity was the root cause of poor performance in Bitcoin, Ethereum, ETH, and other cryptocurrencies, and that the drag was not due to Federal Reserve tightening. Instead, he claimed that the real economy's momentum, fuelled by the artificial intelligence capital expenditure boom (often known as the AI CAPEX boom) and a federal deficit approaching 6% of GDP was draining liquidity from financial markets. 

He further cited six-week changes in global liquidity that advanced by three months, tracking a crypto basket that weighed 60% BTC, 30% ETH, and 10% Solana (SOL).

Roll Over Risk Building

According to Howell, nominal GDP growth is running between 6% and 8%, annualized, the fastest since the first half of the 1980s, and treasury yields are likely to converge upwards towards the trend. He said he was pretty convinced that the 30-year yield would reach 6%. That level is important for refinancing, he explained, because private sector borrowings arranged at much lower rates must still be rolled. 

“People used to think it was around 5.5%-6%. That's the tipping point where the economy could start to move back towards a slower growth period. I'm not saying recession, but it will start to be a constraint,” said the expert. However, he admitted that he no longer knew where that threshold sits.

Bills Fund The Deficit

Treasury Secretary Scott Besant had moved issuance to the front end, with bills at roughly 22% of outstanding Treasuries, versus about 30% 15-20 years ago, Howell said. Monetizing these levels would weaken the dollar and support conditions fit for gold and crypto.

“The push higher in gold that we saw starting in the middle of 2022 was primarily driven by liquidity injections from the People's Bank of China and not Western buying,” added Howell.

Why Bitcoin May Not Have A Big Year In 2026?

Howell said that the 65-month global liquidity cycle, which he tied to the average maturity of global debt, should bottom around the middle of 2027, a reason why he doesn't expect 2026 to be a big year for Bitcoin. To this, he added that “Bitcoin is behaving exactly as Bitcoin should perform.”

Bitcoin’s price was trading at the $77,000 mark. On Stocktwits, the apex cryptocurrency remained in the ‘extremely bullish’ zone, accompanied by ‘extremely high’ chatter levels over the past day.

Howell’s comments come at a time as U.S. Treasury announced a bond buyback this week which the market took as a liquidity-positive signal.

Read also: Bitcoin Beats Almost Every Major Asset Over 10 Years, Now Visser Calls It An ‘Anti-Decay’ Hedge

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