Liquidity is on the rise :)

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The Thesis Remains Strong: Liquidity is on the Rise

Despite the noise and fluctuations, the core thesis holds firm: liquidity is increasing, and that’s good news for Bitcoin.

• Federal Reserve’s Stance: The Fed has kept interest rates steady between 4.25% and 4.50%, signaling two potential rate cuts later this year. 

• Global Liquidity and Bitcoin: Historically, Bitcoin’s price has shown a strong correlation with global liquidity, with studies indicating a 94% correlation to the M2 money supply. 

• Dollar Dynamics: The U.S. dollar has experienced a slight decline, which often leads to increased liquidity in global markets.

In essence, as liquidity flows into the market, asset prices, including Bitcoin, tend to rise. So, despite short-term volatility, the long-term outlook remains bullish.

Key Events This Week in Crypto

1. Federal Reserve’s Interest Rate Decision: The Fed maintained current interest rates but projected two rate cuts by year’s end, aiming to balance inflation concerns with economic growth. 

2. Bitcoin ETFs Gain Momentum: The pro-crypto stance of the current administration has led to increased interest in Bitcoin ETFs, with significant inflows observed in recent months. 

3. Market Reactions to Tariff Policies: The administration’s tariff announcements have introduced market uncertainties, influencing both traditional equities and the crypto market. 

4. Stagflation Concerns: Investors are increasingly wary of stagflation—a combination of high inflation and low economic growth—which could impact various asset classes, including cryptocurrencies. 

5. Global Liquidity Trends: Recent analyses highlight that Bitcoin’s price movements are closely tied to global liquidity, reinforcing the asset’s sensitivity to macroeconomic factors. 

Looking Ahead

While short-term fluctuations are part and parcel of the crypto journey, the increasing liquidity and supportive macroeconomic indicators suggest a positive trajectory for Bitcoin in the coming months. As always, stay informed, stay vigilant, and keep your eyes on the long game.

Until next time, stay savvy!

B. Xx