A popular analyst says that Bitcoin (BTC) and the crypto markets could receive a boost from the resumption of monetary expansion.
In a new video update, the pseudonymous host of InvestAnswers says that global liquidity, or the amount of money circulating in the system, has historically been one of the best indicators for the movements of the crypto markets.
The analyst says that with liquidity slightly falling over the past year, the trend is likely to reverse and boost Bitcoin in the process.
“Global liquidity has fallen down because the US is tampering their money supply. It’s down 4% or 6% year to date 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 little bit of a time lag. Sometimes it’s exactly at the same time, so crazy, crazy times here.
You can see here liquidity has dropped off, but with all the stuff that’s going on with debt ceilings being risen, and other economies around the world like Germany realizing they’re in a recession, money printing will begin again. [I’m] pretty certain of that. And that will drive the prices up, too.
BitMEX founder and crypto veteran Arthur Hayes recently said the Federal Reserve will likely have to print money to pay interest on reserve balances, thereby increasing liquidity in the system. Hayes predicted that wealthy asset holders who received interest payments from the Fed will likely buy risk assets with the proceeds.
“All of this interest paid is effectively a stimulus program to wealthy asset holders. What do wealthy asset holders do when they have more money than they need? They purchase risk assets. Gold, Bitcoin, AI tech stocks, etc. will all be beneficiaries of this ‘wealth’ that is printed by the government and handed out as interest.”
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