Global Liquidity Updates

We're very excited to introduce our unique Global Liquidity Bands Indicator!

This powerful indicator offers insights into Bitcoin's liquidity-based fair value.

Not being overoptimized is one of its main strengths as it comes with both robustness and a track record that speaks for itself.

Notice how after touching the upper / lower band, the price often mean-reverts to its 'fair value'.

As mentioned on multiple occasions, current liquidity environment isn't showcasing positive strength and the fair value plot here showcases that perfectly.

Until the major banks inject more liquidity into the market, the risk of current rally reversing is still there.

Seeing the robustness this model comes with, our team is looking to create additional alternatives of this system that are specifically optimized for other assets, and the crypto total market too. Stay tuned

Despite Bitcoin's recent price run-up, our Liquidity Heatmap still indicates a negative liquidity environment.

There’s reason to believe the Fed could soon end its QT program, as the Reverse Repo Program nears zero.

This shift could bring positive news for both iquidity and risk assets as a whole.

According to the recent Treasury Quarterly Refunding Statement, the Treasury is planning for a year-end cash balance of $700 billion in December.

With the debt ceiling deadline approaching in January, historical trends suggest we may see a significant drawdown of the Treasury General Account.

There’s much to anticipate liquidity-wise for the remainder of the year, but based on current data, we remain bullish.

Longer duration bond yields have been steadily climbing since the Fed cut rates in September.
‍
Fiscal deficits are spiraling out of control, with over $500Bn added to the federal debt in recent weeks alone.

As Paul Tudor Jones said it: all roads lead to inflation.

If inflation is on the horizon, being long on bonds isn't favorable - hence, the surge in yields. Bitcoin stands as the clear escape route for what's likely coming.
‍
The probability of faster-than-expected inflation in '25 is rising, which could prompt the Fed to ease off liquidity injections.
‍
This scenario isn’t ideal, as debt rollover needs remain high, and combined with rising inflation, we may be looking at a setup for potential banking system failure.

TLDR: There may be a small window of opportunity to make the most of this cycle before the real challenges hit.

Data-wise, our Liquidity Index decreased by -0.39t (-0.32%) last week, key driver of this is the MOVE Index.

PBoC has seen decent liquidity injections while most Central Banks remain cautious.

The RoC remains positive. Keep an eye on MOVE index and DXY; any weakness here could signal the start of a strong #Bitcoin move.