Santa Rally or False Dawn? A Look at Market Trends

The Federal Reserve's tightening pace has slowed for the third consecutive week, yet net liquidity's rate of change remains negative.

Key question floating in investors' minds: is easing finally on the horizon?

In the meantime the TGA spenddown continues and so does the RRP decline, which showcases a clear downtrend.

At the same time, lower level of MOVE Index leads to an improved collateral multiplier.

Despite widespread skepticism around Bitcoin's recent rally, much of the disbelief stems from a focus on the traditional M2 money supply, which has been in decline.Ironically, this skepticism may actually be bullish for Bitcoin.

While M2 offers a basic liquidity measure, we prioritize tracking Global Liquidity.

Notably, Bitcoin has closely followed our Global Liquidity Index’s movements.

However, speculative forces can often override fundamentals, which is why a disciplined system is essential - nothing is ever certain in markets.

In the East, China kicked off Monday with a big 706 billion yuan net injection via the 7-day RRP, marking the largest since mid-November.

With plans for proactive fiscal policies next year and a moderately loose monetary policy, China seems poised for a great start in '25.

Pair that with a potential spenddown of the current ~700 billion TGA level, Q1 could end up surprising many in a positive way.

However, given their focus on maintaining a stable USD exchange rate, any major moves may require the US to act first.

Closer to home, the FED is widely expected to cut rates this week again, alongside other global central banks making similar moves.
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The overall global trend is clear: pivot towards easing.Data-wise, our Global Liquidity has decreased by 1.713 trillion, marking a decline of -1.29% this week.

Despite this, the 3-month Rate of Change remains above the 12-month, signaling continued positive liquidity momentum.