Bitcoin and Risk Assets Rally as Global Liquidity Hits $131.6T

Global liquidity continues to rise, with a notable increase of $1.426T over the past week, bringing the total value to an astounding $131.6T.

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The RoC metric has crossed into positive territory, and all of our liquidity charts are currently showing positive signals; a trend that shows no signs of slowing down.

These developments align closely with our current expectations.

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A key factor in the rise of global liquidity has been the drop in the MOVE Index. Less uncertainty in bond markets leads to fewer haircuts on collateral, resulting in more lending, which in turn boosts our Liquidity Index.

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Even though today, China cut its 14-day RRR rate from 1.95% to 1.85%, they have continued injecting higher amounts of liquidity, especially since the FED cut its fund rate.

A 50bps reduction in funds rate is a clear sign that the FED wants to ease.

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It’s game on for the two big central banks, and we’re just at the start of the easing cycle.

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Bitcoin and other risk assets are responding positively to this liquidity flood.

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Looking ahead, September remains a promising month for liquidity-driven market optimism. While the 'bearish September narrative' caught many off guard, our AE Global Liquidity Seasonality Indicator points toward continued favorable conditions through the end of the year.