‘Bitcoin is no longer a native crypto asset. It is a proxy variable for global dollar liquidity.’
Andy Liu, head of HTX Research, let that sentence hang in the air. It was late July, somewhere in a Parisian crypto salon packed with traders, analysts, and the weary survivors of the 2022 winter. I was there, notebook in hand, watching the room recalibrate its mental models.
He didn't stop there. ‘BTC direction depends on liquidity, risk on the dollar, resilience on ETF. ETH direction depends on regulation, resilience on DeFi, confirmation on fees and burn.’ Three axes for each king. Two completely different DNA strands.
This isn't just another quarterly outlook. It’s a declaration of decoupling. For anyone who still treats BTC and ETH as obedient twins, Liu’s framework is cold water.
The context matters. We are mid-2025. Bitcoin has survived the halving and the hash-rate shakeout—though I’ve warned before that miner centralization is a ticking clock. Ethereum has struggled, its ratio against BTC grinding lower as L2s siphon activity and the SEC circles PoS like a hawk. Global liquidity is tightening again, thanks to stubborn inflation in the US. The ETF flows that everyone clings to are becoming a lagging indicator.
Liu’s speech, hosted on July 20 as part of Huobi's expert series, came at a moment when the market needed a map. He provided one. But maps can also show chasms.
BTC: The Macro Mirror
Let's start with Bitcoin. Liu puts it bluntly: BTC is now a proxy for global dollar liquidity. I’ve seen this play out in real time. In 2020, when the Fed printed trillions, BTC went from $4k to $64k. In 2022, when the dollar surged and liquidity evaporated, it collapsed to $16k. The correlation with M2 is tighter than any crypto-native metric.
Based on my audit work during the DeFi Summer, I remember tracking stablecoin inflows as a leading indicator for BTC. Now I track the Federal Reserve's balance sheet. That shift is real.
‘Risk depends on USD,’ Liu said. If the dollar strengthens, BTC bleeds. And resilience? That’s the ETF. The spot ETFs have created a new buyer base, but they are not immune to macro. When the yen carry trade unwound in August 2024, BTC ETF outflows hit record highs.
The contrarian edge here: the market still believes that a Fed pivot automatically yields BTC euphoria. Liu’s framework suggests it’s more nuanced. Liquidity must actually arrive, not just be anticipated. If the pivot is delayed or half-hearted, BTC could trade sideways for quarters.
ETH: The Regulatory Tightrope
Ethereum is an entirely different beast. Liu’s first axis is regulation. ‘Direction depends on regulation.’ This is the sword of Damocles hanging over every staked ETH. I’ve watched SEC investigations into Ethereum 2.0 come and go, but the threat is never dead. If regulators classify staking as a securities offering, the entire PoS value chain—from Lido to Coinbase to solo validators—faces an existential shadow.
‘Resilience depends on DeFi.’ This one stings. DeFi has been Ethereum’s killer app, but it’s also its biggest liability. A regulatory crackdown on DeFi would strip ETH of its main utility. I’ve seen protocols lose 40% of their LPs in seven days during policy FUD.
‘Confirmation depends on fees and burn.’ This is the metric I watch obsessively. EIP-1559 was supposed to make ETH deflationary. It worked for a while—2021 saw a net negative supply. But now, with L2s handling most transactions, L1 fees have cratered. ETH issuance is outpacing burn again. The fuel for the value-capture engine is running low.
The Great Decoupling
Here’s the insight that Liu’s analysis forces: BTC and ETH are no longer driven by the same factors. For years, they moved together—risk-on, risk-off. Now, BTC is a macro asset, ETH is a regulatory asset. One could rally while the other flatlines.
Most funds still treat them as correlated. That’s a blind spot. If liquidity eases but regulation tightens, BTC could run while ETH suffers. Or if regulation clarifies favorably while the dollar surges, ETH might gain relative strength.
Another underexplored angle: the market is pricing in a perfect soft landing for both. Liu’s framework suggests that’s unlikely. The biggest risk is not a crash—it’s divergence that catches traditional portfolio models off guard.
Takeaway
As we approach 2026 Q3, the compass has been pulled apart. One needle points to liquidity, the other to regulation. Volatility isn’t regret the dance. It’s the music we choose to move to. The question is: will you trade the macro game or the policy game? The answer will separate the dancers from the wallflowers.