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The Everything Code Explained: Liquidity, Debt, and Market Cycles (2026)

The Everything Code is a macroeconomic framework that explains market cycles by linking demographics, debt growth, liquidity conditions, and business activity to asset prices across crypto, equities, and global markets.

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The Everything Code is a macroeconomic framework developed by Raoul Pal and Julien Bittel of Global Macro Investor (GMI) that explains how global markets - including Bitcoin - are primarily driven by liquidity created through debt growth, rather than by population or productivity expansion.

Overview

Since 2008, the global economy has entered what analysts at Global Macro Investor call the Liquidity Era. According to The Everything Code, this new environment is best understood through one simple equation:

As population growth slows and productivity stagnates, debt expansion has become the main driver of GDP. To sustain that debt, governments and central banks inject liquidity into the financial system through quantitative easing, fiscal spending, and balance sheet expansion.

The result is a structural shift: markets have become liquidity-driven, not productivity-driven. Stocks, bonds, real estate, and even Bitcoin now rise and fall together based on changes in global liquidity.

This framework has quickly become one of the most discussed macro models for understanding Bitcoin’s price cycles and the broader rhythm of financial markets.

Video: Why Liquidity Drives Market Cycles

The following short video provides a concise breakdown of the Everything Code, explaining how liquidity, debt dynamics, and macroeconomic conditions influence market cycles across Bitcoin, crypto, and traditional assets.

How The Everything Code Works

The foundation of the model is the observation that liquidity flows, not traditional fundamentals, determine asset performance. Raoul Pal and Julien Bittel describe this dynamic as a predictive chain:

1. Financial conditions (such as interest rates, dollar strength, and credit spreads) influence the supply of liquidity.
2. Liquidity, measured by central bank balance sheets and Treasury operations, drives the ISM Manufacturing Index, a leading indicator of business activity.
3. Asset prices - equities, bonds, and crypto - respond to shifts in the ISM and liquidity with a lag.

Historically, liquidity leads ISM by roughly six months, and ISM leads asset performance by about nine. This explains why markets often rally before economic data improves, and why downturns begin while GDP still looks strong.

The Liquidity Era

In the post-2008 world, debt has become the substitute for real growth. Low interest rates and central bank intervention have made liquidity creation a permanent feature of the global economy.

Before 2008, growth was primarily driven by productivity gains and expanding workforces. Since the financial crisis, however, aging populations and slowing innovation have left economies dependent on rising leverage. To prevent defaults and maintain growth, policymakers respond to every slowdown with new waves of liquidity.

This creates a repeating cycle:

• Liquidity expansion → asset inflation → tightening → slowdown → renewed liquidity.

Every major bull and bear market since 2008 - from equities and real estate to Bitcoin - can be traced to this rhythm. It also explains why traditional diversification has weakened: when liquidity expands, almost all assets rise together; when it contracts, nearly everything falls.

Bitcoin and The Everything Code

Bitcoin fits into The Everything Code framework in two distinct ways.

First, it behaves as a macro liquidity asset. Since 2013, Bitcoin’s price has shown a high correlation with global M2 money supply and central bank balance sheets. When liquidity rises, Bitcoin rallies; when liquidity tightens, it falls.

Second, Bitcoin functions as a network adoption asset governed by Metcalfe’s Law, which states that the value of a network increases with the square of its number of users. As Bitcoin adoption grows, its fundamental value base expands independently of short-term liquidity swings.

The intersection of these two forces - liquidity cycles and user adoption - explains why Bitcoin experiences multi-year bull and bear cycles. Liquidity sets the rhythm; adoption amplifies the magnitude.

The 2021 Truncated Cycle

The 2021 cycle offered one of the clearest real-world tests of this model. Many expected the Bitcoin bull market to continue through 2022 based on the four-year halving schedule. Instead, prices peaked in November 2021 and entered a prolonged downturn.

According to The Everything Code, the reason was simple: global liquidity peaked in March 2021 as central banks began tapering stimulus and the U.S. Treasury rebuilt its cash reserves.

Liquidity, not halving mechanics, ended the cycle early. By contrast, earlier cycles - 2013 and 2017 - coincided with liquidity expansion phases, aligning both macro and supply-side effects.

This perspective reframes Bitcoin’s halving narrative as a contributing factor, not the primary driver.

The Next Liquidity Cycle (2024–2026)

As of 2026, the Everything Code model suggests the world is entering a new expansionary phase. Roughly $9 trillion in U.S. government debt must be refinanced over the next year, requiring renewed liquidity injections to stabilize markets.

Central banks have already begun easing financial conditions to manage refinancing pressures and prevent systemic stress. If the model holds, this liquidity wave could extend the current cycle into late 2026, creating what Global Macro Investor refers to as “the banana zone” - the parabolic final phase of a liquidity expansion.

For Bitcoin, this means potential alignment between liquidity growth and network adoption, echoing earlier macro upcycles.

Benefits of Understanding The Everything Code

• Macro clarity: Helps investors and analysts contextualize Bitcoin’s moves within global financial conditions rather than isolated crypto events.
• Cycle forecasting: Provides a structured method to anticipate when markets may shift from risk-on to risk-off.
• Portfolio insight: Explains why traditional diversification has weakened and why digital assets have become high-beta expressions of global liquidity.
• Cross-market awareness: Links Bitcoin to equities, bonds, and commodities, revealing their shared dependence on liquidity flows.

Risks and Limitations

While powerful, the model has limitations.

• Simplification risk: The equation (GDP = population + productivity + debt) abstracts from geopolitical shocks, technological breakthroughs, and supply chain disruptions.
• Policy uncertainty: Central banks can change strategy abruptly, making liquidity forecasts difficult.
• Productivity resurgence: Advances in artificial intelligence or automation could restore productivity-driven growth, weakening the model’s assumptions.

For these reasons, The Everything Code should be viewed as a framework - not a deterministic prediction tool.

Comparing The Everything Code to Other Models

This comparison shows that macro liquidity models provide a stronger real-time explanation of Bitcoin’s performance than purely on-chain or issuance-based metrics.

Conclusion: Liquidity as the Master Variable

The Everything Code distills a decade of macro evolution into one idea: liquidity drives everything.

From 2008 onward, rising debt and policy-driven liquidity have replaced organic growth as the foundation of global markets. Bitcoin, emerging during this transition, naturally became both a reflection and a beneficiary of liquidity expansion.

By understanding this framework, analysts can interpret Bitcoin not as a speculative outlier, but as part of a much larger global liquidity cycle - one that continues to define asset behavior in 2026 and beyond.

Frequently Asked Questions

What is The Everything Code?
It’s a macroeconomic framework by Raoul Pal and Julien Bittel that links GDP growth, debt expansion, and liquidity to asset price cycles across global markets.

Who created The Everything Code?
The model was developed by Raoul Pal and Julien Bittel of Global Macro Investor (GMI), a research firm specializing in macroeconomic analysis.

How does liquidity affect Bitcoin?
When central banks and governments expand liquidity, risk assets like Bitcoin rise. When liquidity tightens, they fall. Bitcoin’s price closely follows global liquidity trends.

Is The Everything Code the same as Bitcoin’s halving cycle?
No. The Everything Code is a macro framework based on liquidity and debt, while the halving is a supply-side event. The two often interact but are not the same.

Can The Everything Code predict bull markets?
It can highlight conditions that typically precede bull markets - such as rising liquidity and easing financial conditions - but it’s not a precise timing tool.