Listen, right now the crypto market is really divided. On one side, you have Galaxy Digital lowering their year-end target from $185k to $120k, and on the other side, JPMorgan still sticking to $170k in the next 6-12 months. And I wonder: who’s really right?

The answer is simpler than you think. It all depends on liquidity. When dollars are abundant, capital flows into risky assets and cryptocurrencies will rise. When liquidity tightens, everything shifts back to government bonds and cash. It’s that simple. And at this moment, liquidity is blocked by the U.S. government, which has set a record for shutdowns. The Treasury balance has approached $1 trillion. That explains all the recent declines.

But here’s where it starts to get interesting. The bears say: look, Democrats won the November local elections, Trump is in trouble, and that means stricter regulation for crypto. If Democrats regain control of Congress in 2026, the capital that bet on favorable policies will have to rethink everything. That’s a solid argument, I won’t deny.

But the bulls have an even stronger point. Raoul Pal of Real Vision says we’re close to a turning point. The government is about to reopen, and when that happens, the Treasury will start spending $250-350 billion over the next few months. The Fed has already restarted overnight repo operations. When money starts flowing again, liquidity will loosen, and cryptocurrencies can rebound.

Arthur Hayes adds an interesting detail: he links the 8% drop in dollar liquidity from July to today. But once the Treasury begins spending after the reopening, liquidity will bounce back and push Bitcoin higher. He calls this phenomenon ‘invisible QE’ — the United States will need to issue about $2 trillion in new debt each year, which will continue to expand the dollar supply. Pure fuel for crypto.

There’s another factor that bulls are emphasizing: the CLARITY law is moving quickly. It went from the House to the Senate in just 4 months, with bipartisan support. If passed by the end of 2025, it will transfer regulatory authority over most digital assets from the SEC to the CFTC. That means less uncertainty, more clarity, and banks and brokers will finally be able to manage spot ETFs at scale. This is the kind of catalyst that could push crypto to new heights.

Now, the real risk no one wants to face: what if the U.S. economy actually enters a recession? Bitcoin has never gone through a full recession cycle. The dot-com bubble of 2001 and the 2008 crisis happened before Bitcoin was born. So we don’t know how it would behave. Would it be a safe haven like gold or crash like tech stocks? That’s the real unknown.

Current signals are mixed. Weak employment growth, declining consumer spending, rising food inflation squeezing the middle class. If these trends continue, 2026 could be very risky. But at the same time, Trump and Musk are reconciling, Republicans are consolidating power, and the possibility of a change at the Fed leadership to someone more favorable to rate cuts is real.

So, how do I see it? It depends on the time horizon. In the short term, the next few weeks will be volatile. Galaxy’s conservative target of $120k might hold until we see the government reopen and initial spending data. In the medium term, if liquidity really starts to expand and the CLARITY law passes, then JPMorgan’s target of $170k becomes more credible. In the long term, if the five-year cycle replaces the four-year one as Raoul Pal suggests, then the peak could come in Q2 2026, and now might be the right time to position yourself.

The real risk isn’t politics; it’s uncertainty itself. If the market doesn’t know who will win the 2026 elections for too long, capital will stay on the sidelines. And that can hurt more than a clear defeat of one party. The crucial question remains: how will crypto react in the next recession? We’ll probably only find out in 2026. Until then, we’ll keep discussing, and the market will stay volatile. The only certainty is that crypto will go up or down based on factors we still can’t fully control.