Global liquidity surges, signaling potential bull run for Bitcoin, analysts claim.
Economists from Goldman Sachs recently reduced the chance of a 2025 U.S. recession from 25% to 20%, igniting hopes of interest rate cuts. This reduction followed positive retail and jobs data, hinting at economic stability.
Goldman analysts suggest further rate cuts if August job reports sustain this trend. This optimism has led to robust gains in U.S. stock indices, including the S&P 500 and Nasdaq Composite.
Global liquidity is increasing, which has historically boosted crypto markets. With rising confidence in liquidity conditions, focus is shifting to how these economic trends could impact Bitcoin and the broader crypto market.
U.S. Liquidity Surge
U.S. Treasury plans a massive liquidity injection to stabilize the economy. BitMEX cofounder Arthur Hayes predicts this could push Bitcoin past its all-time high of $73,700.
Hayes highlights mechanisms like the overnight reverse repurchase agreement (RRP), which has dropped from over $2.5 trillion to $333 billion. A reduction in the RRP balance could add liquidity to the market.
The Treasury might also utilize its general account, holding $750 billion, to further boost liquidity, potentially injecting up to $1 trillion into the economy.
Implications for Bitcoin
Periods of increasing liquidity generally see Bitcoin surges, as more funds flow into risk assets. Hayes forecasts a strong Bitcoin bull market by year-end if these liquidations occur.
China’s Liquidity Moves
China faces economic strain, with the first contraction in bank loans in 19 years, according to macro analyst TomasOnMarkets. The People’s Bank of China has responded by injecting $97 billion into the economy via reverse repo operations.
China’s leadership may introduce further stimulus measures, potentially boosting liquidity and stabilizing the economy.
Global Coordination
Central banks, including the Bank of Japan, have collectively injected substantial liquidity into the global economy. Jamie Coutts from Real Vision notes that global money supply rose by $1.2 trillion recently.
The U.S. dollar’s recent weakness may indicate the Federal Reserve’s tacit approval of these liquidity measures.
Bitcoin Price Forecast
Bitcoin recently experienced a sharp decline amid economic concerns and yen trade unwinding. Trading around $59,000, Bitcoin faces resistance at $60,000-$62,000.
For a true bull phase, Bitcoin needs to break $70,000, predicts Hayes, who believes it could hit $100,000. Francesco Madonna, CEO of BitVaulty, also sees a bullish phase, targeting $250,000 for Bitcoin.
Recent gold price peaks could indicate a forthcoming rally in Bitcoin and other risk assets, with liquidity injections playing a crucial role.
Conclusion
As global liquidity measures continue, Bitcoin could see substantial gains, potentially breaking past its all-time high.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
