In a recent interview, analyst Lyn Alden predicted a gradual increase in global liquidity through 2025, though she does not anticipate the rapid surges seen in previous years.
Alden
notes
that while 2022 was notably tough for liquidity, conditions have stabilized in 2023 and 2024, setting the stage for a moderate rise. However, she expects this upward trend to be steady rather than dramatic, with limited likelihood of a liquidity boom.
The popular analyst points out that much of the existing debt in the U.S. was secured at near-zero interest rates during 2020 and 2021. As a result, current rate cuts are less effective in boosting refinancing and investments since significant amounts of debt are still tied to low rates.
Additionally, Alden highlights that even if short-term rates are lowered, long-term rates might not follow suit, which could restrict new borrowing and economic stimulation. This dynamic, she suggests, may temper the impact of rate cuts, leading to a more measured liquidity increase rather than a sharp expansion.
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Alden further explains that the economic environment in 2025 may see ongoing challenges, particularly as sectors tied to long-term borrowing could feel the pinch from higher costs. With rate cuts less impactful due to much of the debt already locked in at low rates, businesses and consumers may face limited incentives to refinance or invest.
This creates a cycle where liquidity grows at a measured pace, unlike the robust influx of previous years. Alden cautions that this restrained growth could influence investment in risk assets like
Bitcoin
, as the steady, rather than explosive, rise in liquidity may keep overall market enthusiasm in check.
