Key Points
- Global liquidity is increasing, potentially setting up Bitcoin for an upside potential.
- The expected U.S. Fed rate cuts and T-bills issuance could further fuel Bitcoin’s price.
Charles Edwards, the founder of Capriole Investments, recently highlighted the significant increase in global liquidity.
Edwards noted that this surge had broken a four-year consolidation level, which could have implications for Bitcoin (BTC).
Bitcoin and Global Liquidity
Bitcoin, the world’s largest cryptocurrency, is known for its correlation with liquidity. Any increase in global liquidity could potentially drive Bitcoin’s price up.
Historically, Bitcoin’s cycle highs in 2017 and 2021 coincided with a rise in global liquidity, as pointed out by market analyst Francois Quinten.
The recent increase in global liquidity is linked to the commencement of quantitative easing, with central banks, including those in Canada and the U.K, reducing their interest rates.
U.S. Liquidity and Bitcoin
The U.S. is expected to start Federal rate cuts by September, which could further boost global liquidity and impact Bitcoin’s price.
Traders are highly convinced of a September Fed rate cut, with interest rate traders pricing a nearly 60%-40% Fed rate cut for 25 and 50 basis points, respectively.
In addition to the anticipated Fed rate cut, U.S. liquidity could be further boosted by the issuance of over $300 billion in T-bills by the U.S. Treasury Department by the end of the year.
T-bills are used by the government to raise funds to cover fiscal deficits. Therefore, a positive net issuance of T-bills would increase U.S. liquidity.
This increase in U.S. liquidity could propel Bitcoin’s price to $100,000, according to BitMEX founder Arthur Hayes.
At the time of writing, Bitcoin was trading at $60.8k, with a short-term sell wall at $63k.
