Global liquidity has reached new record levels, after maintaining stability for the last two years. This means that there is more capital available in the economy, which exhibits a new scenario for the financial world.
Historically, global liquidity has increased after long periods of stability, driving greater demand in the markets. Consequently, assets such as Bitcoin/” target=”_blank” rel=”noreferrer noopener”>bitcoin (BTC) have experienced bullish trends in these scenarios.
The current increase in liquidity It occurs not only due to the recent interest rate cuts, but also due to the sustained printing of money. These are two themes that are expected to continue, so the capital available to the markets could continue to grow.
Willy Woo, professional trader and market analyst, stands out that, before the current increase, liquidity had a longer consolidation phase than the two seen previously.
This can be seen through the following graph. Therefore, “there is a lot more room for ‘brrrrr’ in the coming years,” he warns.
Bitcoin price up (candles) and global liquidity (blue line). Source: Willy Woo.
“Brrrr” is a colloquial and humorous expression used in the bitcoiner world to refer to the massive printing of money by central banks. It refers to the sound of money printers working tirelessly. The term became popular during the covid-19 pandemic.
Precisely, the last time there was strong growth in liquidity was during the covid-19 pandemic, as a result of issuance to finance the deficit. This led to a bull run in the markets.
“China is the main printer today,” highlights Woo. Given this, he expects other countries to follow his example. In addition, its central bank has established an interest rate cut, continuing this policy that the United States carried out in September for the first time in more than four years.
Greater liquidity boosts markets
The inorganic issuance of money promotes its devaluation since its supply increases more than its demand. This tends to lead to greater demand for other assets, such as gold and bitcoin due to its scarcity and Mining decentralized.
“Bitcoin is a proven protection against money printing,” says Woo. This is shown by its price, which has historically been motivated upwards in periods of greater liquidity.
Currently, bitcoin is trading 13% below its all-time high price recorded almost seven months ago, from which point remains in a consolidation stage. Therefore, as long as liquidity continues to grow, as reported by CriptoNoticias, it is possible to break upwards this lateral phase.
Meanwhile, gold and the S&P 500 (SPX), an index that compiles the shares of the main 500 companies listed in the United States, reached new all-time high prices the last week. This reflects investors’ current search to maintain and increase the value of their capital in the face of greater liquidity and uncertainty.
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