Crypto Coins It has been experiencing a nightmare since the mid -December and the expectation of rise in the first quarter has fallen into the water. The first quarter is almost over, and a significant portion of crypto currencies went down to even last year’s bottom levels. The damages of investors waiting patiently since the end of 2021 were not compensated. For many Altcoins, patiently has not changed the result.
Global Liquidity and Crypto
If the money becomes abundant, the risk markets rise. If the risk markets rise, we see that bull markets are experienced in crypto currencies. Since the increase in global liquidity means increasing crypto currencies, it actually has a very flat logic.
Global liquidity is generally understood as the volume of financial flows. There are large criteria and indicators used to estimate its size. However, these are only estimates. It is more important to understand the driving forces of the changes in liquidity. Nicrypto says in his present assessment;
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“Interests If it rises: Borrowing becomes more expensive, which can cool expenditures. This usually leads to a narrowing of the general market liquidity. If interest rates fall: borrowing becomes cheaper and potentially provides more breathing space for economy and risk assets (including crypto).
If the returns rise: the bond market may mean that inflation or less recipients expect (therefore bond prices decrease, returns rise). It is usually linked to a more restrictive environment for high growth investments. If the returns fall: it may mean that money is directed to bonds (the prices up, the returns down), possibly indicate concerns of economic slowdown – but may indicate that liquidity is in search of security.
If the main indices rise: the risk appetite may be good, and people feel more comfortable when investing. Usually, it is aligned with easier or stable liquidity conditions. If they fall: it indicates a mood that is far from risk. This may coincide with a more cautious tone in liquidity or at least in trading. ”
When the full is strengthened, so Dxy When it increases, liquidity can be drawn from other markets and in this case the pressure on the crypto increases. When DXY declines, liquidity flows into other currencies, while crypto currencies feel this support.
If M2 Money Supply If it grows: more money is circulating in the system. Since there is more cash to chase investments, this is often a good sign for both traditional assets and crypto. If the M2 shrinks: less dollars moves, which can brake speculative assets. When M2 is in a decline, many trades remain in defense until they see that the trend is flattened or reversed.
Will crypto coins rise?
The answer is not so complicated. M2 money supply increases while crypto currencies should also rise. Using data from 2013 to 2024, you will see that the correlation of BTC with a global M2 is 94 percent.
Global liquidity is rapidly increasing, but Quantitative Tightening) – quantitative tightening has not yet reversed by the FED. Trump says I’m going to do this and says interest rates will be downloaded. As of 2022, the Fed, which starts to narrow the balance sheet, reverses the M2 increase with the increase in crypto currencies. We’re moving towards this right now.
Responsibility Rejection: The information contained in this article does not contain investment advice. Investors should be aware that crypto currencies carry high volatility and thus risk and carry out their operations in line with their own research.
