Bitcoin (CRYPTO: BTC) could be signaling the early stages of a new two-to-three-year bull market, according to veteran analyst Michael Howell.
A New Liquidity Cycle
In a Bankless interview on Monday, Howell noted Bitcoin's resilience may indicate that global liquidity conditions are stabilizing sooner than expected which typically follow five-to-six-year cycles.
He emphasized that an early liquidity recovery is not his base case, which still anticipates a bottom in the second half of 2027.
Howell identified $70,000 as a critical Bitcoin level, arguing that sustained trading above it, alongside improving bank reserves, could strengthen the case for an earlier recovery.
The expert cited the Fed's efforts to maintain ample bank reserves and Treasury Secretary Scott Bessent's bond buybacks as potential liquidity tailwinds.
He sees growing Fed-Treasury coordination easing bond volatility and potentially cushioning the liquidity downturn.
Will BTC Double As Global Liquidity Expands?
Howell estimated global liquidity at nearly $196 trillion, up from $185 trillion a year ago, and expects roughly 8% annual growth over the long term.
Bitcoin has historically demonstrated significantly greater sensitivity to liquidity changes than gold, although Howell expects that relationship to weaken as institutional adoption increases.
He suggested Bitcoin could at least double over the next decade as liquidity expands, although short-term downside risks remain.
Howell expects Bitcoin to outperform altcoins during liquidity downturns due to its monetary hedge characteristics.
Ethereum and other growth-oriented cryptocurrencies could lead during liquidity expansions.
Howell Recommends Buying BTC And Gold On Dips
Howell warned that tightening financial conditions, widening credit spreads and rising bond volatility could pressure markets heading into 2027.
He identified the MOVE Index (measuring Treasury market volatility) as a key liquidity indicator, warning that readings above 90 could disrupt liquidity creation.
Howell favors Bitcoin and gold as long-term inflation hedges, with higher gold allocations to offset Bitcoin's volatility.
"Buy the dips and buy the bigger dips harder," he advised, while identifying Bitcoin's $70,000 support and improving global liquidity as key signals to watch.
