Crypto Liquidity Ties Deepen as Global Asset Markets Shrink and Diverge

NewFire Group chief economist Fu Peng argues crypto assets are leading liquidity indicators, noting that tightening global funds cause speculative assets like Bitcoin and Ethereum to face initial liquidation pressures.

Woofun AI notes that Fu Peng, chief economist of NewFire Group, stated at WIKIEXPO that mainstream crypto assets such as Bitcoin serve as leading indicators for global core liquidity. He explained that following a 2021 liquidity peak, Federal Reserve balance sheet reductions have triggered structural funding pressures and a general contraction of global funds. During these tightening phases, capital first exits highly volatile and speculative assets, causing cryptocurrencies and small-cap stocks to be sold off first, which contradicts the retail belief that funds rotate directly between crypto and U.S. stocks. Fu Peng further observed that Bitcoin and Ethereum market caps have stabilized with declining volatility, signaling institutionalization and the failure of speculative narratives for worthless tokens.