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| By Juan Villaverde |
For the past few months, I’ve been on the hunt for the most accurate Bitcoin (BTC, “A-”) indicators.
I started with gold and global liquidity, which lead Bitcoin by six months and three months, respectively.
Then, I refined my liquidity approach by singling out Central Bank Liquidity (CBL) and Asian liquidity (AL).
All in an effort to find the most accurate insight for what swings we can expect from BTC.
But in response, I’ve been asked a very prescient question:
Why look to the bond market for clues about 2026 — when the Fed is already telling us what to expect?
Answer: What the Fed says and what it does … are two different things.
The bond market predicts what central banks will actually do. Not what they happen to be blathering on about or promising.
Whatever Chair Jerome Powell says in a press conference — whether promising rate cuts or hinting at more tightening — reflects only what’s going on today.
But the bond market doesn’t give a hoot about verbal guidance.
Bond investors aggregate all available information — inflation trends, growth data, liquidity flows and even Fed credibility. And then, they express a collectively weighted judgment through price.
This is why the U.S. Treasury market matters so much.
As the biggest, deepest financial market on the planet, it’s the beating heart of global liquidity. Every major asset class — stocks, real estate, crypto, commodities — ultimately prices off it.
My research shows that the collective “wisdom” embedded in bond prices is one of the most reliable leading indicators of what central banks will do.
And by extension, what liquidity and risk assets like Bitcoin are likely to do — roughly 10 months in advance.
Right now, Bitcoin and Central Bank Liquidity Are Falling in Tandem
Powell may be cutting interest rates. But via quantitative tightening, he continues to drain liquidity from the system.
Which explains Bitcoin’s recent weakness.
This is also where the bond market becomes so valuable. It’s like a telescope that lets us see months into the future.
The 10-year U.S. Treasury prices — which most closely align with Central Bank Liquidity — bottomed back in January.
This inflexion point marks the moment the bond market began sniffing out a forthcoming shift toward easier monetary conditions. Conditions that could support a broad rebound in global liquidity and, ultimately, crypto prices.
Why do I say that?
Because my research shows the 10-year Treasury bond predicts moves in Central Bank Liquidity roughly 10 months ahead.
Which makes it an indicator for our BTC indicator.
That low in January? Sure enough, it was followed by a bottom in Central Bank Liquidity in November.
Bonds As a Telescope for Liquidity
Take a look at the green vertical dotted line. And notice how early bonds were to anticipate the sharp drop in liquidity taking place late 2021 through 2022.
Remember, it was during this period that virtually every major asset class — from crypto to equities — fell in tandem.
Every major move in the 10-year Treasury market shows up in Central Bank Liquidity about 10 months later. This relationship isn’t perfect, but it’s consistent.
Now, please observe the red vertical dotted line (above). That marks the January low in the 10-year Treasury. To the right of that line, 10-year bond prices are rising.
In other words, bonds are telling us to …
Expect easier monetary conditions through most of 2026.
That doesn’t mean we’ll get a flood of liquidity. But we should see notably looser conditions than what we had through most of 2025.
And here’s where it really gets interesting.
What happens if I replace Central Bank Liquidity (in Bitcoin’s chart) with the 10-year Treasury? We get …
A February 2026 Forecast Low for Bitcoin
The green vertical dotted line marks Bitcoin’s Oct. 6 high, which lines up perfectly with the bond market proxy.
The red vertical dotted line shows the next major bottom predicted by bonds for Bitcoin: Feb. 10, 2026.
To be clear, bonds aren’t a perfect predictor of Bitcoin prices. Rather, they predict liquidity. And since liquidity drives Bitcoin, we can use bonds indirectly as a forecasting tool.
But that also means a larger margin of error.
After accounting for the 10-month lead time, highs and lows in bonds usually lead Central Bank Liquidity by a few weeks to a couple of months.
That January low we saw in bonds could translate to a Bitcoin bottom as late as May of next year. The key clue: Liquidity is projected to bottom right now — this very week.
Once that low is confirmed, we’ll be able to pinpoint when Bitcoin’s next near-term low should occur.
If you’re interested in learning how my Weiss Crypto Investor strategy is helping members navigate the volatility until then, click here.
Best,
Juan Villaverde
