TLDR:
- Global liquidity as of 2012 shows a correlation of about 90% with Bitcoin and about 97% with Nasdaq.
- Total US liquidity rose from a three-month low, which historically drives crypto market movements.
- Stablecoin supply grew by nearly 50% last year as the volume of blockchain transactions worldwide reached the trillions.
- DeMark’s weekly and daily indicators suggest that the crypto markets may soon become a technical trend.
In The crypto market is facing deep pessimism as prices struggle and traders warn of a prolonged downturn. However, macro signals related to global liquidity suggest that conditions may change soon.
Several financial indicators now point to expanding liquidity in major economies. These changes could change the outlook for Bitcoin and the broader crypto markets in the coming weeks.
Global liquidity signals point to a potential comeback for the crypto market
Macro investor Raul Pal showed several liquidity indicators that historically track the movement of Bitcoin and technology stocks. He shared the analysis via a detailed thread on X.
Pal stated that global liquidity has a strong correlation with Bitcoin and the Nasdaq 100. According to his data, the relationship with Bitcoin has reached 90 percent since 2012.
Liquidity growth is currently around 10% annually. Pal noted that the trend continues with no signs of slowing down.
The financial conditions tracked by Global Macro Investor usually lead the liquidity trend in six months. According to Pal, these conditions still indicate light speed.
U.S. general liquidity temporarily stalled earlier this year after the effects of the government shutdown. Pal explained that this measure usually leads the crypto markets by about three months.
The data is now showing US liquidity recovery from the lows achieved three months ago. If the historical trend continues, this recovery could seep into the crypto markets.
Pal also pointed to the business cycle as a key driver of risk assets. Accelerating economic activity often raises earnings expectations and increases investors’ risk appetite.
Credit expansion, policy moves and Stablecoins add liquidity
Additional sources of liquidity can strengthen the trend. Pal highlighted the perfect leverage ratio as a key banking mechanism.
The rule allows banks to expand their balance sheets while absorbing Treasury issuance. According to Pal, this process increases liquidity by creating credit.
Tax refund payments also contribute to liquidity flow. When the land is returned to the bank accounts, they increase the spending capacity and the potential demand of the loan.
Pal also hinted at political action China. Authorities there continue to expand the balance sheet of the country’s central bank.
The rate cut in the United States is another factor. Low borrowing costs often increase disposable income and reduce risk in financial markets.
Regulatory developments can also affect the flow. Pal showed what was offered CLARITY Act as a potential framework for banks and asset managers entering the crypto markets.
Stablecoin issuance is already gaining momentum. Pal reported that supplies grew by nearly fifty percent last year as transactions reached trillions of dollars.
He also noted that new artificial intelligence agents that interact with blockchain systems can expand the overall market for the sector.
Pal added that technical indicators are currently showing oversold conditions in the crypto markets. DeMark’s weekly signals can form a market base within two weeks.
Daily DeMark indicators are also approaching potential reversal signals. According to Pal, weak price action can complete these adjustments.
Oil prices remain the main macro risk factor. Long-term growth may tighten financial conditions and slow liquidity expansion.
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