The Rocket Fuel Powering a Crypto Boom in 2025  | | Robert Ross
Speculative Assets Specialist | Bitcoin hit a new all-time high this week. And I couldn't be happier about it. I've been pounding the table for the last two years that we were entering a new crypto bull market. And while I've made the case that we are "late cycle" - likely the top of the 7th inning - I'm also confident that the most profitable leg of the cycle is coming. This is known as "alt season" (which you can read about here). But these smaller cryptocurrencies aren't simply going to rally because it's preordained. Rather, there's a palpable catalyst propelling the crypto market higher. And I expect it to persist for at least the next six to 12 months. The Global Liquidity Boom Is Here Bitcoin is the best-performing asset in the world in 2024. And the good times will keep rolling for crypto. I've been saying for over a year about how global markets were in their "Goldilocks" phase. This means that we have the following market conditions... - Falling and stable inflation
- Slow but steady economic growth
- A Federal Reserve that is easing monetary policy.
View larger image This setup has been clear to me since October 2023. And my conviction only grew stronger after the "Fed pivot"... when the central bank moved from a high interest rate regime to a low interest rate regime. But this dynamic is merely one facet of what I call the "global liquidity boom." Why Liquidity Matters Bitcoin's price movements have historically shown a strong correlation with global liquidity - the availability of money and credit in the global economy. When central banks cut interest rates, inject capital into financial systems, or loosen monetary policy, the global M2 money supply - a good proxy for global liquidity - starts to rise. Risk assets like Bitcoin tend to thrive. 
View larger image Over the past five years, Bitcoin has shown an 80% correlation with global liquidity indicators like central bank balance sheets and real interest rates, according to data from Fidelity Digital Assets. Remember when the Federal Reserve expanded its balance sheet by over $3 trillion during the pandemic in 2020? Bitcoin surged over 500%, moving from $7,000 to $41,000 by January 2021. And we're currently setup for a similar boom. The 2024-25 Liquidity Boom We're currently experiencing a liquidity surge similar to 2020. Central banks around the world are pivoting to more accommodative policies... 
View larger image And the latest chapter in this boom came last week when the Bank of Canada lowered its benchmark interest rate by a surprise 50 basis points... Along with the Chinese government announcing a massive stimulus package aimed at boosting economic growth and stabilizing financial markets. Here in the U.S., the market expects the Federal Reserve will cut another 25 basis points tomorrow. This boom could be the catalyst for a massive move higher in crypto over the next six months. After all, Bitcoin has long been correlated with changes in global liquidity. Bitcoin's Unique Position in a Liquidity Boom Bitcoin thrives in liquidity-rich environments because it offers a hedge against inflationary pressures and currency devaluation. Those two things often accompany aggressive monetary easing. But it's not just a hedge. It's also a "high beta" asset... Bitcoin tends to rise more dramatically than other assets. So it attracts speculative capital when markets are flush with liquidity. This dynamic makes Bitcoin particularly sensitive to shifts in global liquidity... - 2020 Liquidity Boom: Bitcoin rose 305% as central banks injected more than $9 trillion into global financial markets.
- Early 2023: Bitcoin rallied 85% in the first half of the year as central banks globally began slowing their rate hikes, signaling a shift to easing policies.
Today's falling inflation, stable GDP growth, and synchronized global rate cuts could send Bitcoin on another explosive move higher in the next six to 12 months. While Bitcoin is already at a new all-time high, this could be just the beginning. As the global liquidity boom continues, cryptocurrencies are likely to remain one of the most attractive asset classes. We'll monitor central bank policies and liquidity flows closely, as these will be key factors in Bitcoin's performance in the months ahead. In short... Liquidity is fuel for Bitcoin's rocket - and the tank is full. Stay safe out there, Robert Want more content like this? | | | | | | 
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