Economist Fu Peng: Crypto Assets Deeply Tied to Global Liquidity, Market Contraction Accelerates

According to economist Fu Peng speaking at WIKIEXPO on July 24, crypto assets are fundamentally bound to global liquidity dynamics. Fu Peng indicated that Bitcoin and mainstream cryptocurrencies now serve as leading indicators of liquidity strength in traditional markets. Following a critical inflection point in November 2025, when the Federal Reserve's balance sheet reduction reached critical levels, global liquidity has contracted, triggering what he calls a "shrinking circle" market dynamic where high-elasticity and speculative assets are liquidated first. He noted that his prediction made when Bitcoin was around 110,000 last year—that crypto would likely halve within 12 months—has already been validated, confirming crypto's deep correlation with global liquidity cycles.

Regarding the AI sector, Fu Peng observed that major companies investing heavily in AI infrastructure have seen free cash flows reach zero, signaling a transition from hardware dominance in 2022 to software valuation restructuring in 2026, with terminal applications expected to reprice around 2030.