Both traditional markets and cryptocurrency sectors are experiencing notable liquidity shifts. For instance, recent analyses and charts by analyst Ted on the X platform reveal that the current bullish trends in these markets are far from over.
The 65-month liquidity cycle, which bottomed out in October 2023, is now on an upward trajectory and is expected to peak in 2026. This cycle aligns with projections of central banks easing monetary policies in response to slowing economic data over the next 18-24 months. As liquidity expands, it supports bullish market conditions, reinforcing the notion that the current cycle has more room to grow.
A critical indicator of liquidity, the M2 money supply, has shown the lowest rate of expansion since the 1990s. This suggests substantial potential for easing liquidity conditions. Historically, low expansion rates precede phases of significant monetary easing by central banks, which could inject more liquidity into the financial system. This potential for increased liquidity is a strong indicator that market conditions could remain favorable for some time.
In the cryptocurrency market, liquidity has returned, notably driven by Bitcoin ETFs. However, the velocity of inflow has not yet reached the frenzied levels typically seen at market cycle tops.
This indicates that while there is substantial interest and investment in cryptocurrencies, the market has not yet hit its peak saturation. The current phase suggests a steady accumulation period rather than a speculative bubble, pointing to sustained growth potential.
Recent data highlights a significant inflow into Bitcoin ETFs, with $950 million flowing into spot Bitcoin ETFs in the US last week alone. This marks the largest net inflow since March.
Such substantial investments are likely to continue as Bitcoin prices trend higher, bolstered by renewed confidence from traditional finance sectors. The influx of capital into Bitcoin ETFs reflects increasing institutional interest and could drive further price appreciation.
