The 110-Day Lag: Institutional Desks Exploit While Retail Chases Headlines

The liquidity tide is turning, and crypto's compass is spinning faster than most realize.

While retail investors fixate on price charts and protocol promises, the smartest money is tracking central bank balance sheets and global M2 flows—because in 2025, your portfolio's fate hinges less on blockchain innovation and more on whether the Fed's next move amplifies or drains the liquidity pool. From the historic whiplash of 80% liquidity growth followed by 40% contraction to Bitcoin miners liquidating $1.7 billion during recent drawdowns, the traditional playbook is getting rewritten in real time.

Today's issue cuts through the noise to reveal what's actually moving markets: why Raoul Pal traces 90% of Bitcoin's price action to global liquidity swings, how Coinbase research identifies a crucial 110-day lag between M2 changes and crypto prices (a timing edge institutions are already exploiting), and why Monad's $431 million raise represents a fork in the L1 narrative rather than validation of the infrastructure gold rush. We're also exploring why actively managed crypto ETFs are now outpacing the underlying coins themselves, what Bitcoin's volatility cutting in half means for portfolio construction, and how AI isn't just competing with crypto for capital—it's fundamentally reshaping who wins in both markets.

In a market where algorithms outperform Bitcoin by 250%, where quality meets liquidity matters more than protocol checklists, and where macro literacy fused with crypto-native edge separates winners from noise-chasers, the advantage goes to those who can read the intersection of central bank policy, institutional flows, and technological disruption. Let's dive in.

As always, feel free to send us feedback at [email protected].

If you want to know where crypto’s headed, follow the liquidity—because capital, not code, sets the tempo.

The choreography of digital asset cycles increasingly mirrors the ebb and flow of global liquidity, with the Federal Reserve cast as lead conductor. In 2021, the Fed and its global peers pumped liquidity to the tune of 80% growth, only to tighten the reins with a 40% contraction as inflation came waltzing in. For an asset class that sits at the crossroads of technology and commodity markets, these shifts ripple further and faster than most realize.

For investors like Michael Howell, CEO of CrossBorder Capital, dissecting balance sheets yields foresight. "Crypto generally behaves a little bit like a tech stock and a little bit like a commodity… it’s a mix of those two factors," notes Howell. Recent global moments—from the UK gilt panic to Silicon Valley Bank’s collapse—have compelled central banks to dance between easing and tightening, blurring the cycles further.

Raoul Pal, founder of Real Vision, traces 90% of Bitcoin’s $BTC.X ( ▲ 0.48% ) price moves to global liquidity swings. He points to “total liquidity, not rate of change,” as the real force. David Duong at Coinbase $COIN ( ▼ 0.58% ) sharpens the signal further: global M2’s liquidity changes don’t wash over crypto in real-time, but with a 110-day lag—a detail institutional desks can’t afford to miss.

In this cycle, the most valuable charts may come not from on-chain analytics, but from the playbooks of central banks and global capital flows. Crypto’s future, for now, is being written in the margins of monetary policy.

Crypto’s centre of gravity is shifting, as institutional allocators and asset managers probe for fresh angles in a volatile, ever-maturing market.

For those managing digital assets, the story now unfolds less on the wilds of price discovery and more on the discipline of portfolio construction—where volatility is down, correlations are evolving, and new proxies for exposure are challenging old orthodoxy.

Matthew Siegel, portfolio manager behind VanEck’s Onchain Economy ETF ($NODE ( ▼ 4.81% ) ) , draws a sharp line. “If volatility is down by half, then maybe the correction is half as big and 40% feels like a reasonable chance to take a shot on a risk-reward basis,” he notes. This matters, especially as Bitcoin miner liquidations reached $1.7 billion in the most recent drawdown—an aftershock partly triggered by tightening credit, highlighting just how integral broader liquidity trends have become.

Michael Howell, CrossBorder Capital, urges cool realism: liquidity, not speculation, will steer risk assets. His framework—anchored to a 65-month liquidity cycle—suggests the tide is receding, with impacts yet to be fully felt across digital assets. He cautions: “America doesn’t want a surging gold price… and China’s rapid accumulation speaks volumes”—reminding us that macro flows now shape crypto’s narrative as much as any protocol upgrade.

There’s nuance in the divergence: actively managed ETFs linked to crypto and AI-adjacent equities are outpacing the underlying coins themselves—a signal that thoughtful diversification is trumping strict token exposure. As NODE and peers handily outperform, the case for hybrid strategies only strengthens.

For allocators, the next phase won’t hinge on mere coin selection, but on fusing macro literacy with crypto-native edge—yielding portfolios fit for a re-globalised, capital-sensitive cycle.

Disconnected hype cycles are out—crypto’s infrastructure game is synchronizing with capital cycles and narrative discipline.

Monad’s $MON.X ( ▼ 3.61% ) $431 million raise may suggest relentless appetite for fresh Layer 1s, but the market’s sharpest eyes see a fork in the road rather than a gold rush. As Bitcoin bounces from $81,000 to $86,000, investors are learning to parse capital intensity from real adoption, with Michael Howell—speaking on "Bankless"—reminding that “money must be somewhere by definition. When it’s in financial markets, it’s not in the real economy, and vice versa.” The liquidity story, underpinned by the global liquidity index’s climb from $100 trillion (2010) to nearly $200 trillion, acts as both foundation and accelerant for every price narrative.

Not all that glitters in the L1 space is novel technology. Avi Felman’s critique—"block space is a commodity, infrastructure is hard to invest in without scarcity in use case”—lands as skepticism cools the fever. Indeed, Layer 2s like Polygon $POL.X ( ▲ 2.09% ) quietly attract flows with reduced transaction fees and by enabling tokenized yield strategies previously reserved for private funds.

Bullish sentiment isn’t universal, but Chris Jourdan’s advice has teeth: “Launching in a depressed market, where fear and greed are low, allows for building a more committed and organic community.” In practice, that’s shifting focus from noise to foundations—a view substantiated by miners liquidating Bitcoin holdings to fund AI infrastructure rather than staking maximalist claims.

As the space matures, alpha lies not in chasing every new protocol, but in deciphering where quality meets liquidity—and in looking beyond the checklist of the new to the substance that endures.

As artificial intelligence accelerates its conquest of capital markets, crypto is finding both a competitor and a collaborator in the machine.

The union is already visible in the numbers: Animus AI has outperformed Bitcoin by more than 250% since 2020, underscoring why investors aren’t just circling AI—they’re shifting liquidity toward it. Trading desks now wield neural networks as their sharpest edge. “While most investors…leverage a crucial edge, AI,” observes LG Doosette of Milk Road, noting how automated pattern recognition is steadily eroding the advantage once held by intuition and instinct.

But the capital flows cut both ways. David Duong, Coinbase’s Head of Institutional Research, notes that “if the Fed doesn’t cut rates in December…this could drive a Santa rally,” but equally, he points to the cross-currents as AI-driven tech stocks absorb capital once destined for digital assets. The result? A new 10% spike in crypto market leverage this spring, amplified by bots hunting micro-inefficiencies as volatility surges.

Emergent concerns aren’t merely financial. Mass workforce reductions—like Amazon’s reported 100,000+ layoffs—are a harbinger of AI’s disruptive reach well beyond trading floors. As Matthew Siegel of VanEck puts it, the convergence of AI and crypto “is reframing the very purpose of capital markets—who benefits, and who is obsolete.”

The takeaway: the smartest investors aren’t choosing between AI or crypto, but mastering the interplays—poised for the next act as intelligence, both artificial and financial, becomes programmable.

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Disclaimer: The information provided in this newsletter is for informational purposes only and should not be considered investment advice. Cryptocurrency investments are speculative and involve significant risk. Please conduct your own research and consult with a financial professional before making any investment decisions.