Shift in Market Dynamics
Former hedge fund manager James Lavish has suggested that the traditional “four-year halving cycle” period closely followed by Bitcoin (BTC) investors is over. According to Lavish, the market is now driven by global liquidity movements and central bank policies rather than supply shocks.
James Lavish, a guest on Scott Melker's popular YouTube show, discussed the macroeconomic dynamics that will shape the future of the cryptocurrency market. Lavish stated that Bitcoin price movements can no longer be explained solely by the halving of the mining reward, but are instead driven by “global liquidity cycles.”
The Liquidity Cycle Theory
Lavish argued that Bitcoin is still in a structural bull market, but the rules of the game have changed. The renowned investor gave a clear answer to the question, “Are we still in a four-year cycle, or is it dead?”:
“I think the four-year cycle is dead. We are now in a liquidity cycle. Global liquidity cycles typically span 6-7 years. We are currently in a temporary contraction, but I expect liquidity to expand again next year.”
According to Lavish, the Fed and the Treasury Department are under too much political and economic pressure to allow markets to experience a significant decline. Pointing out that bank reserves have fallen below the critical $3 trillion level, Lavish argued that the Fed will eventually be forced to resort to quantitative easing (QE).
“If there's more than a minor hiccup in the market, they'll come with firefighting equipment (liquidity). They can't manage black swan events, but they can manage liquidity problems,” Lavish said, indicating that the money taps will be opened in the coming period.
K-Shaped Recovery and Inflation Concerns
Another striking point in the interview was Lavish's analysis of the current economic order as creating a “K-shaped” recovery. Lavish painted a picture of wealthier individuals prospering while the majority of the population is crushed by inflation, and stated that official inflation data does not reflect reality:
Housing, insurance, and childcare costs have ballooned so much that the poverty line for a family in major cities has actually approached $130,000-$140,000. People are being forced to take significant risks just to survive. The reason they turn to Bitcoin and other assets isn't to get rich, but to avoid becoming poor.
Future Price Projections
Lavish also shared his future projections, predicting that Bitcoin could reach new highs in 2026 with the expansion of liquidity. The expert noted that a short-term horizontal trend could be observed between $80,000 and $100,000, and that the price would recover rapidly once liquidity entered the system.
“We'll see liquidity added to the system next year. When that happens, I wouldn't be surprised if Bitcoin reaches $150,000 or even $180,000.”