#加密市场观察 Analyzing the Crypto Market in 2026 from Debt Refinancing and Liquidity Perspectives

Currently, most crypto investors are exhausted and confused due to the prolonged volatility in the crypto market. Many believe that Bitcoin's current four-year cycle has peaked. However, if we shift our focus from cryptocurrencies themselves to global liquidity and debt refinancing, we find that the traditional four-year crypto cycle may have been unknowingly broken—not because crypto failed, but because the global debt system has changed. In this article, we will analyze the 2026 crypto market from the perspective of debt refinancing.

After the 2008 financial crisis, almost every major government in the world implemented a "debt jubilee." They reduced the interest costs on nearly all debts to zero, and the private sector also entered an environment of near-zero interest rates on a large scale. When interest rates are close to zero, debt interest costs almost disappear. This allows governments and corporations to refinance and roll over debt with minimal friction. The private sector's balance sheets gradually recover; meanwhile, public debt quietly expands to hedge against risks. This approach essentially created a "four-year cycle"—or rather, it once formed a four-year cycle.

To explain this mechanism: it operates roughly over a three to five-year interval. About every four years, governments tend to refinance their debt by printing money, and this process usually lasts around three years. Subsequently, there is often a phase where liquidity is withdrawn from the system, before starting anew (of course, each cycle's scale tends to increase). Therefore, Bitcoin is not simply following some halving cycle as some believe. Its true cycle corresponds to debt refinancing.

Each cycle generally follows the same structure: governments refinance debt by printing money over several years, liquidity increases, and asset prices surge—covering everything from tech stocks to commodities and crypto assets. Then, liquidity is temporarily withdrawn, and a new cycle begins. Bitcoin reacts faster and more significantly than most assets. This mechanism is like the seasons of spring, summer, autumn, and winter, with each season representing the intensity of money printing at different stages.

The seasons correspond to how aggressively money is printed at each stage: winter is when printing is minimal; other seasons see more aggressive money printing. Bitcoin's price closely follows the four-year debt refinancing cycle, and during each economic winter, Bitcoin experiences a major correction. According to this framework, Bitcoin should crash in 2026. But the key question is: will 2026 truly be an economic winter in this cycle? In other words, does this framework still hold in 2026?

To answer this, let's examine another indicator: the US Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI). This monthly indicator is based on surveys of US manufacturing supply chain managers and reflects manufacturing activity (values >50 indicate expansion compared to the previous month; values <50 indicate contraction). When plotted and fitted with a four-year sine wave, it shows that before 2024, the PMI also followed a four-year cycle. This suggests that manufacturing activity also follows the debt refinancing cycle.

The critical point is 2024. After that, the ISM index no longer follows the expected pattern. So, what went wrong?

The change occurred in the timing of debt rollovers: from 2021 to 2022, major economies led by the US extended the average debt maturity from about 4 years to approximately 5-6 years. Why?

Because they found that interest rates could no longer be lowered further (consider what central banks did during the COVID-19 pandemic in 2020 to provide emergency liquidity). They resorted to issuing longer-term debt to ease refinancing pressures. This change altered the rhythm of refinancing and liquidity release, effectively lengthening the market cycle.

If we fit the ISM index from 2020 onward with a 5.4-year cycle, the fit is better than with a 4-year cycle. Of course, simple fitting isn't enough to be convincing. The key point is that within the next twelve months, the US will need to roll over nearly $9 trillion in debt. If these debts are rolled over at current interest rates, it will impose enormous pressure on the government and corporations. This is an unavoidable mechanical fact. To facilitate smooth rollovers, interest rates must fall, and liquidity must be injected. That’s why figures like Trump, Bessent, and Stephen Miller have been urging (or pressuring) Powell to cut rates or even expand the balance sheet.

Once rates are cut and the balance sheet is expanded, liquidity will begin to flow into the system: central banks will buy bonds, money supply will increase, and these funds will eventually flow into risk assets, including cryptocurrencies. Even though Powell has cut rates three times since September last year, each cut of 25 basis points has only slightly lowered interest rates, which remain above the neutral rate. Considering that the peak of debt rollovers will occur in the first half of 2026 and the Federal Reserve's leadership change in May, we can expect liquidity to start expanding around that time.

Another point worth noting is that past Bitcoin bull market tops have precisely coincided with peaks in the ISM index. Currently, the ISM index has been below 50 for seven consecutive months, indicating that US manufacturing is still contracting and economic expansion has not yet begun. According to historical patterns, if the ISM does not break above 50 and sustain an upward trend, Bitcoin's cycle top will not arrive.

Will the ISM index improve in 2026? Most likely, yes. After all, in November, Trump will face midterm elections—what could be more effective at boosting votes than a campaign to Make American Manufacturing Great Again?