A popular analyst says Bitcoin (BTC) and the crypto markets could get a boost from the resumption of monetary expansion.
In a new video update, the pseudonymous InvestAnswers host says that global liquidity, or the amount of money circulating in the system, has traditionally been one of the best indicators of the crypto markets’ movements.
The analyst says that with a slight drop in liquidity over the past year, the trend is likely to reverse and boost Bitcoin in the process.
“Global liquidity is down as the US messes with its money supply. It’s down 4% or 6% so far, and that’s had a big impact on this gold line cutting through the Bitcoin line. Normally, when liquidity goes up, Bitcoin goes up, with a slight lag. Sometimes it’s right at the same time, so crazy, crazy times here.
You can see here that liquidity has decreased, but with all this stuff going on with debt ceilings being raised and other economies around the world like Germany realizing they’re in a recession, money printing will start again. [I’m] pretty sure about that. And that will also drive up prices.
BitMEX founder and crypto veteran Arthur Hayes recently said that the Federal Reserve will likely have to print money to pay interest on reserve balances, increasing liquidity in the system. Hayes predicted that wealthy asset holders who have received interest payments from the Fed are likely to buy risky assets with the proceeds.
“All this interest paid is basically an incentive program for wealthy asset owners. What do wealthy asset owners do when they have more money than they need? They buy risky assets. Gold, Bitcoin, AI technology stocks, etc. will all benefit from this “wealth” printed by the government and distributed as interest.
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