A $108 Trillion Global Liquidity Surge Would Send Bitcoin to the Moon - So Why Not?
As global financial markets continue to face policy and interest rate uncertainties, the question of the impact of increased liquidity on Bitcoin is increasingly being asked. Despite M2 money supply reaching an all-time high, Bitcoin has yet to see the massive boom expected. This could be due to a number of factors, including a delay in the response of risk assets to increased liquidity, as well as mixed signals from traditional financial markets and Bitcoin technical indicators.
While increased global liquidity typically drives risk assets like Bitcoin higher, on-chain metrics analysis suggests that the Bitcoin market may be in an accumulation phase, and the response to increased liquidity may be delayed. This is consistent with previous cycles, where Bitcoin typically takes some time to reflect changes in M2 liquidity.
Additionally, the Federal Reserve’s quantitative tightening (QT) may be coming to an end, which will bring more liquidity to the market. However, the most important factor is the pace of change in liquidity, rather than just the current level of liquidity. If the pace of liquidity growth continues to increase, Bitcoin may begin to react more strongly in the near term.
Meanwhile, uncertainty from financial institutions and national policies towards Bitcoin remains a factor to watch. Regulatory uncertainty and the attitude of large institutions towards Bitcoin may continue to affect the value of this asset in the near future.
