Bitcoin Analysis: Beyond the Block – September 2025

Today the Ainslie Research team brings you the latest monthly update on Bitcoin – including the Macro fundamentals, market and on-chain technical metrics and all of the other factors currently driving its adoption and price. This summary highlights some of the key charts that were discussed and analysed by our expert panel. We encourage you to watch the video of the presentation in full for the detailed explanations.

Bitcoin and Global Liquidity

Bitcoin remains the most directly correlated asset to global liquidity. Trading Bitcoin is essentially trading the global liquidity cycle, albeit with an adoption curve that amplifies both the highs and lows of each cycle. Our approach is to accumulate Bitcoin during the 'bust' phase, when liquidity is at its lowest, and rotate out during the 'late cycle' phase, when liquidity is overstretched and downside protection becomes prudent. We typically rotate into gold at this point. When this rotation is timed well, it can significantly outperform ongoing monetary debasement. The most recent cycle low was in November 2022, and since then, Bitcoin has outperformed all other major assets.

Where are we currently in the Global Macro Cycle?

Welcome to the written report for September's Beyond the Block. Viewers of the Beyond the Block podcast on YouTube will already be aware of our new offering: the Ainslie Bitcoin Bullion Fund. This wholesale managed fund dynamically allocates between Bitcoin, gold, and silver, aiming to deliver strong capital growth while protecting against drawdowns via precious metals. Its framework is directly informed by the macro and liquidity analysis featured in Beyond the Block.

If you qualify as a wholesale investor and would like to learn more about the Ainslie Bitcoin & Bullion Fund, visit our official information page at https://www.ainsliewealth.com/ainslie-bb-fund.

Macro positioning has remained largely unchanged since July. We’re still in the 'early cycle' phase, with a shift to 'mid cycle' on the horizon. Despite Bitcoin, gold, silver, and equities hovering around all-time highs, this suggests we’re not yet approaching the end of the macro cycle. For now, we remain risk-on.

US Macro Data and Early-Cycle Indicators

US growth momentum is showing signs of life. The latest PMI data indicates renewed expansion across services and manufacturing. The ISM Services PMI has moved back above the 50 threshold, and the S&P Global Services index recently surprised to the upside. Manufacturing, though still lagging services, has printed back-to-back readings above 50 for the first time since early 2023. These moves in new orders and production suggest the worst of the slowdown may be behind us.

Our preferred 3-Month Leading Indicator, derived from inventories and new orders, is surging above 50. Firms had been running down inventory through 2024 on recession fears, but we’re now seeing restocking alongside a pickup in new orders—a classic early-cycle signal.

Meanwhile, the Trump campaign is reportedly preparing to declare housing a 'national emergency'. With housing making up nearly 20% of US GDP, policy support here could catalyse a construction boom, stoke broader growth, and inject momentum into PMIs.

Inflation, Employment, and Policy Priorities

Central banks appear to be shifting their focus away from strict inflation targeting toward employment and economic stability. Persistent inflation above 2% no longer seems to warrant policy inaction. Instead, pre-emptive rate cuts are emerging as the norm. The headline CPI figure is becoming less important than underlying wage and employment data.

Behind closed doors, policymakers don’t mind a moderate level of inflation. It gradually erodes the real value of government debt and avoids politically unpalatable austerity. This recalibration of policy goals—toward growth, full employment, and economic resilience—is reshaping the fundamental drivers of asset markets.

Where Are We in the Global Liquidity Cycle?

Since 1970, global liquidity cycles have driven both asset booms and financial crises. Central banks attempt to smooth these cycles by injecting liquidity during busts and tightening during booms. While often unsuccessful in 'smoothing', these cycles create opportunity, particularly in trading assets like Bitcoin.

Currently, the 12-month rate of change in global liquidity has topped and is turning lower, providing a short-term headwind for Bitcoin and other risk assets. However, this appears seasonal and temporary. We expect a rebound in Q4.

Our "Global Liquidity and Bitcoin Sensitivity" chart shows Bitcoin has historically responded with a 5x-9x multiplier to liquidity changes. In contrast, gold and silver show 2x-3x sensitivity, and equities around 1x. This positions Bitcoin to outperform significantly during periods of liquidity expansion.

Recently, Bitcoin's monthly average price has dipped below the 'fair value' suggested by liquidity levels for the first time in nearly a year. Unless liquidity pulls back sharply, Bitcoin appears poised to catch up.

Monetary Policy Developments

Over the past six weeks, the Fed has maintained a restrictive monetary stance while the Treasury has rebuilt its TGA cash balance to nearly $850 billion, pulling liquidity out of the banking system just months after a sharp TGA drawdown fuelled a wave of reserve injections and asset price rallies. This switch has acted like a stealth tightening, forcing money market funds and banks to buy short-term bills and draining cash from the system, temporarily offsetting broader expectations for easing even as jobs data softens and market participants look ahead to potential rate cuts into year-end. With a TGA target of $850 billion by the end of September, Q4 will bring a more liquidity positive environment from the U.S.

The ECB has led the global central bank easing cycle in 2025, cutting rates eight times to bring its deposit rate down to 2%, a clear pivot from its previous tightening stance, as inflation stabilized near target and growth concerns took centre stage. Over in China, the PBOC continues to deliver selective liquidity injections rather than broad cuts, balancing stimulus with currency risks and property sector woes, making policy considerably tighter than its Western peers. This divergence underscores the very different macro challenges each bank faces as the global economy pivots from a period of synchronized tightening to more differentiated, local responses.

Looking forward, central banks are dialling back monetary restrictiveness, but with a measured approach, trading the hard line of inflation targeting for a more nuanced balance between employment, growth, and price stability. 

Bitcoin and Seasonality

Last month, we pointed out that August and September tend to be the market’s flatline months, historically posting little to no performance, with August barely positive and September averaging outright negative returns. After massive run-ups in April and May, capital needs to be repriced, and the market must digest those outsized moves. Like clockwork, traders and institutional allocators step back, allowing the market to catch its breath and rebalance after spring’s speculative boom. Layer on lower trading volumes, summer holidays in major markets, and fiscal flows shifting to quarter-end settlement, and you get a liquidity environment where upside is capped and noise often outweighs signal. This consolidation phase is the market’s reset button, setting the table for fresh risk-on flows in October and November when global liquidity cycles turn back up and Bitcoin begins its next seasonal leg higher.

ETF and Treasury flows have slowed, but this isn't inherently bearish. Flow trends often act as contrarian indicators—muted flows frequently mark local bottoms. As sentiment turns, renewed inflows often spark the next leg higher.

Business Cycle and Central Bank Easing

These flows provide a window into market sentiment, with surges in inflows indicating bullish conviction, and periods of negative or muted flows almost always coinciding with local price bottoms and a shift in investor mood. When outflows dominate, it signals caution or short-term panic, flushing weak hands out of the market, but historically, these same moments have set the stage for major reversals, as the tide turns and long-term capital steps in to buy from the forced sellers. As investors and institutions recalibrate risk, ETF flows act as both a warning signal and a contrarian opportunity. When the selling pressure eases, sentiment pivots, and the market’s next accumulation phase begins.

A rising business cycle, as measured by expansion in PMIs, signals improving economic conditions, strength in new orders, production, and employment, which typically drive flows into risk assets across the board, and Bitcoin is no exception. As PMIs push higher, business confidence and investment appetite improve, sparking stronger demand for equities, credit, and high-beta trades like crypto. In this environment, bitcoin historically thrives as a “liquidity release valve” for renewed animal spirits.

When the vast majority of central banks are cutting rates, it sets up an undeniable tailwind for business sentiment and the broader cycle. With nearly 90% of central banks currently easing, a level rarely seen in the past four decades, the stage is set for both the ISM and broader sentiment indicators to grind higher well into 2026. Strip out the noise from trade wars and other headlines, and you’re left with a coordinated global easing cycle that has always been one of the purest signals for future economic momentum.

History tells us that if the percentage of central banks cutting rates is rising, the odds favour further gains in business activity and sentiment, not late-cycle exhaustion. In fact, the true late-cycle playbook only starts in earnest when central banks collectively flip back to tightening, and even then, higher rates take about nine months to make a meaningful dent in the real economy. Put simply, we’re not only a long way from that point, right now, but the prevailing direction is also full throttle on stimulus, and that’s the fuel for risk assets and ISM components need to keep marching higher.

Focusing purely on the Fed, at the time of writing and the night before PPI, market pricing is assigning about a 90% probability to a 25-basis point Fed rate cut at the September meeting and a 10% chance of a 50-basis point cut, with traders also leaving the door open for additional quarter-point cuts at both the October and December FOMC meetings. The forward curve now implies 2-3 total cuts for the remainder of 2025, with expectations that the fed funds rate could end the year near 3.75% and possibly keep drifting lower as we head into 2026, particularly if unemployment continues to tick up and inflation remains contained.

Lower U.S. rates should result in a weaker US dollar, supporting Global liquidity and the business cycle expansion.

Conclusion

As we look at the investment landscape for the remainder of 2025 and beyond, expanding global liquidity and rising PMIs are setting the tone for a resurgent cycle in risk assets. Central banks, once laser-focused on inflation, have shifted their priorities; the focus is now built around supporting growth and shoring up labour markets, even if that means living with inflation above traditional targets. Liquidity is forecasted to continue pouring back into the market as the Fed and other major players ease policy, with the latest data showing reserves rising and credit creation picking up, especially on the back of coordinated rate cuts and fiscal tailwinds that boost both consumer demand and business investment.

As economic activity accelerates, evidenced by consistently strong PMIs, and policy from officials, capital allocators are snapping up growth assets from equities to crypto, with Bitcoin acting as a direct proxy for global liquidity pulses. Investors should note that central bankers will not overreact to modest inflation if the trade-off is a stronger, more resilient cycle. Fundamentals may fade into the background, but the liquidity tide and growth momentum are what truly move markets. In this regime, staying ahead of the liquidity curve will be critical for capturing outsized returns.

Watch the full presentation with detailed explanations and discussion on our YouTube Channel here:  

Until we return with more analysis next month, keep stacking those sats!

Joseph Brombal

Research and Analysis Manager

The Ainslie Group

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