Original Title: The Liquidity Pyramid: Why This Bull Market Still Has Legs
Translated by: Odaily Asher
Editor's Note: The bull market in summer 2025 is vastly different from previous cycles. Funding sources are no longer primarily dependent on Federal Reserve or Treasury policies, but are driven by large tech giants' equity earnings and record capital expenditures. These funds are cascading into the crypto market through new mechanisms of corporate Treasury and ETFs, forming a self-reinforcing flywheel effect. This article will delve into this mechanism, analyze the changing buyer structure of ETH and BTC, and provide future market predictions based on macro environment and policy factors.
Despite the Federal Reserve's tightening policies and weakened fiscal stimulus, risk assets continue to surge, driven by two overlapping chains. First, AI-driven capital gains and record capital expenditures by large tech giants are continuously injecting risk funds into the crypto market through wages, supplier payments, and shareholder dividends. Second, crypto enterprise Treasuries (TCo) have established a new transmission mechanism that directly converts stock market reflexivity into on-chain buying, forming a self-reinforcing market flywheel.
This flywheel effect can not only withstand seasonal weakness and macro noise but also continuously push market growth until top-tier corporate capital expenditures decline or ETF demand stagnates. In other words, this bull market is driven by liquidity created by large listed companies, rather than traditional monetary or fiscal policies.
Liquidity Source Shift and New Crypto Buyers
Traditionally, market liquidity depended on the Federal Reserve or Treasury, but current liquidity has shifted. Stock earnings and capital expenditures exceeding $100 billion from tech giants like NVIDIA and Microsoft are radiating across economic layers, influencing suppliers and employees, and driving retail investors to increase positions in risk assets, especially the crypto market.
Simultaneously, the crypto market has seen new structural buyers - corporate Treasuries (TCo). In past cycles, the lack of large buyers was a reason for price volatility. Now, BTC and ETH corporate Treasuries not only serve as funding bridges but can also defend key price ranges and drive price breakthroughs. Corporate Treasuries can be divided into two generations: early TCo was price-insensitive, merely providing a bottom; new ETH-related TCo has price discovery functions, capable of actively buying when equity value accelerates, forming a complete self-loop: company stock issuance brings funds, TCo buys reserve assets driving token prices up, while the parent company's stock value held by TCo rises, lowering financing costs, then reinvesting in the crypto market, repeating the cycle.
It's important to note that this mechanism is not risk-free. If ETFs or retail investors fail to fill key price ranges, gaps may emerge, causing rapid token price declines, with short-term volatility still warranting caution.
Ethereum's Structural Changes
The ETH market is significantly different from previous cycles. Past buyers were primarily retail investors and miners, while now, ETFs and TCo have become market leaders, jointly combating liquidity gaps, with price range defense and staged buying forming a new market narrative.
From a technical analysis perspective, the "cup theory" can explain this phenomenon: prices first form a low point in a specific range (cup bottom), then slowly recover (cup rim), forming a U-shape. When prices break through the cup rim, it usually indicates market potential for continued growth. In the Ethereum market, corporate Treasuries will focus on defending the $3,000 to $3,500 price range, while ETFs buy in stages in the intermediate gaps, like filling a cup with water, giving prices a chance to smoothly break through the rim and continue the upward trend.
If tech companies' ETH allocation demand remains strong, this market trend has room to continue; if demand is insufficient, the market might experience brief gaps and pullbacks. Overall, the changing buyer structure means Ethereum is no longer solely dependent on retail investors or miners, but supported jointly by institutions and corporate Treasuries, making the market more stable and providing conditions for sustained price increases.
Macro Environment and Dual Driving Forces of Tech Giants' Capital Expenditures
In the current market environment, macro factors and AI development are intertwiningly influencing economic and market trends. US commodity sales prices have been rising for several months, implying an inflation level of around 4%, indicating ongoing price pressures. Despite this, the Federal Reserve may tolerate some inflation to support economic growth under an overall stable labor market. However, the long-term high youth unemployment rate is often seen as an early economic cycle warning signal - young groups are typically the first to feel economic fluctuations, and if employment conditions remain weak, the overall labor market may be under pressure, affecting risk assets.
Capital expenditures by tech giants are becoming an important source of market liquidity. Massive tech companies are investing heavily in AI infrastructure, providing funds to suppliers, employees, and shareholders, potentially significantly improving the economy's total factor productivity in the medium to long term. If AI-driven productivity improvements meet expectations, the US public debt to GDP ratio could drop from the baseline of 156% to about 113% by 2055, with per capita GDP growing by about 17%. However, historical experience shows that productivity effects from technological innovation typically have a lag, with markets often discounting these future returns in advance, which is part of the current high valuations in stocks and crypto assets.
Simultaneously, trade policy uncertainty and tariff pressures are changing corporate investment behaviors. Facing a complex international trade environment and policy ambiguity, many companies prefer investing funds in financialized assets rather than long-term capital expenditures like factories, equipment, or expansion projects. This short-term preference for asset market fund flows paradoxically supports risk asset growth, forming a structural background of private sector liquidity driving the bull market.
Investment Strategies
In investment strategies, focus should be on high-quality tech giants with AI compound growth stocks, while selectively deploying in infrastructure sectors like computing power, electricity, and networks. In the crypto market, Bitcoin can serve as a benchmark risk exposure asset, while Ethereum plays the role of a "self-reinforcing flywheel", requiring close attention to key price defense ranges and potential gaps. For risk management, monitor ETF inflow and outflow dynamics, corporate Treasury fund arrangements, and large tech companies' capital expenditure plans. Moderately increase positions in key defense ranges, but be cautious about reducing positions if market breakthroughs lack subsequent support.
Overall, this bull market differs significantly from the 2021 cycle, with current upward momentum primarily sourced from private sector liquidity driven by large tech companies. These companies release funds through equity earnings and capital expenditures, flowing to suppliers, employees, shareholders, and retail investors, then transmitted to the crypto market through corporate Treasuries and ETFs, forming a self-reinforcing market flywheel. Key price ranges are supported by corporate Treasury defense and staged buying, while ETFs and retail investors fill intermediate gaps, sustaining market momentum. As long as tech giants continue actively investing capital and this private sector liquidity chain remains unobstructed, the bull market has further room to expand.
