AI spending complicates Bitcoin’s liquidity bet
- Treasury volatility still matters, but Michael Howell says slowing liquidity and AI investment can weigh on financial markets.
- Jack Mallers sees calmer bond markets as a potential boost for Bitcoin, not a substitute for broader liquidity.
Calmer Treasury markets may help Bitcoin - but they do not guarantee cash will flow into financial assets. The fresh wrinkle in two podcast discussions is that money can leave markets even as economic activity strengthens, including to fund AI infrastructure.
The Frontier had already led the Treasury-volatility angle on 2026-10-14. In episodes covered on Oct 13, 2026, Jack Mallers of The Jack Mallers Show argued that bond-market stability can matter more to liquidity than Federal Reserve rate decisions. When Treasury prices swing, lenders may discount the bonds they accept as collateral, limiting how much they lend. Mallers said Treasury buybacks rose from $4 billion to $8 billion to help steady that market, and linked earlier stabilization to Bitcoin’s move from $60,000 to $80,000.
Michael Howell, appearing on BTC Sessions, added a complication: global liquidity momentum is slowing while substantial debt comes due for refinancing. He said 80% of financial-market transactions involve rolling over existing debt. Citing World Bank data, Howell said 80% of global lending is backed by collateral; he also said Treasury haircuts at dealer banks rose from 2% to 5% as the MOVE Index climbed from 60 to 115. The MOVE Index tracks volatility in Treasury markets.
Howell’s other warning is about where cash goes. He said large technology companies’ spending on chips and data centers shifts money out of financial markets and into the real economy. That can support business activity while leaving stocks and bonds with less liquidity. So his account does not simply contradict Mallers: steadier collateral may ease one constraint, while slowing liquidity and investment outflows remain others.
Neither episode establishes that these forces will determine Bitcoin’s next move. Together, they sharpen the question beyond what the Fed will do: whether bond-market stability can translate into more available credit - and whether that money reaches financial assets rather than being absorbed elsewhere.
Source Intelligence
- Deep dive into what was said in the episodes
If You Don't Get Global Liquidity, You Don't Get The Everything Bubble | Michael Howell • Oct 13
- Michael Howell states that global liquidity momentum is slowing down as part of a 65-month debt refinancing cycle. Existing debt rollovers account for 80% of primary financial market transactions.
- Capital is transitioning out of financial markets and into real-economy AI infrastructure spending. Treasury issuance of short-term bills monetizes government procurement, pulling liquidity away from Wall Street assets.
- Howell cites World Bank data showing 80% of global lending is collateral-backed. When the Move Index doubled from 60 to over 110, dealer banks raised haircuts on Treasuries from 2% to 5%.
- Howell explains that US Treasury Secretary Scott Bessent uses debt buybacks of off-the-run Treasuries to suppress market volatility rather than force overall yields down.
- Howell describes Bitcoin as a long-duration liquidity sponge that responds positively to Treasury QE and capital leakage from Chinese monetary easing. A sustained bull run requires yield curve steepening.
- Howell compares current AI infrastructure spending to the 2000s fiber optic boom. Massive capital deployment drives macroeconomic utility but risks severe margin collapse for direct equipment suppliers.
Also discussed on this episode: (5)
Macro (4)
- Howell notes that the debt-to-liquidity ratio triggers financial crises when it breaches 200%. COVID-era interest rate cuts encouraged borrowers to push debt maturities into late-2020 maturity walls.
- Howell observes that US Treasuries, German Bunds, and Chinese government debt serve as core global collateral with minimal term premia. French OATs and British Gilts command higher yields due to fiscal risks.
- Howell highlights that Japan successfully reduced its debt-to-liquidity burden through Bank of Japan balance sheet expansion and yen devaluation, raising nominal GDP growth to near 5%.
- Howell estimates true Chinese real GDP growth sits at 1% despite official figures claiming 4% to 5%. The People's Bank of China doubled its balance sheet since 2022, accelerating domestic gold buying.
Fed (1)
- To avoid repo market stress, the Federal Reserve introduced Reserve Management Purchases to maintain bank reserve levels after balance sheet runoff spiked overnight rates in late 2025.
Jack Mallers
Ignore The Fed - Watch This Instead • Oct 13
- Jack Mallers notes Bitcoin remains range-bound at $82,541 with a $1.66 trillion market cap at block height 971,145. The asset sits 34.5% below its record high of $126,080 set on October 6, 2025.
- Jack Mallers claims global monetary system stability depends on debt refinancing rather than Federal Reserve rate tweaks. Global debt-to-GDP exceeds 300% and U.S. debt-to-GDP surpasses 100%, forcing continuous rollover of multi-trillion-dollar sovereign obligations.
- Jack Mallers identifies the MOVE Index as the key driver of credit creation, noting volatility directly shrinks collateral capacity. The bond volatility index rose over 30% across six months to peak near 115, tightening financial conditions past the 85 baseline.
- Jack Mallers argues Treasury Secretary Scott Bessent doubled Treasury buybacks from $4 billion to $8 billion to stabilize bond market volatility rather than depress yields. Suppressing volatility restores collateral values, creating the liquidity environment that pushed Bitcoin from $60,000 to $80,000.
- Citing research from Michael Howell, Jack Mallers states rising 10-year Treasury yields reflect economic growth expectations instead of default fears. Term premiums remained flat over two years while Atlanta Fed GDPNow estimates dropped from 6.2% to 3.6%.
- Jack Mallers highlights data ranking Bitcoin as the most responsive asset to fiat liquidity changes, with a sensitivity metric of 22.4. Gold scores 6.0 and equities score 3.0, positioning Bitcoin as the primary direct beneficiary of central bank liquidity expansion.
Also discussed on this episode: (4)
Banking (2)
- Jack Mallers details Strike's cash offering paying 3.6% annual interest in Bitcoin, backed by FDIC insurance up to $250,000. The company plans to integrate its lending product to elevate yield payouts toward 4% to 6%.
- Jack Mallers reports Strike is approaching $1 billion in total loans issued over 18 months without traditional marketing spend. Institutional lending rates begin at 6% for borrowing amounts over $50 million, while brokerage fees range between 0.25% and 0.89%.
Custody (1)
- Jack Mallers highlights Strike's security upgrades, including rolling seven-day transfer limits protected by a mandatory five-day cooling period. The controls extend across all withdrawal channels to block physical coercion, device theft, and auto-withdrawal exploitation.
Regulation (1)
- Jack Mallers announces Strike secured its European Markets in Crypto-Assets license, enabling marketing and operational expansion across the European Union. Mallers plans European market research to evaluate local demand for Bitcoin-backed credit products in euros and pounds.