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Bitcoin – How Global Liquidity Will Affect BTC’s Bull Market Trend
Global liquidity highlights Bitcoin’s sensitivity to economic shifts, potentially driving a bullish momentum amidst quantitative tightening and renewed optimism.
As we navigate the complexities of the cryptocurrency market, it is essential to acknowledge how global liquidity can impact the trajectory of Bitcoin’s bull market trend.
Recently, the decrease in demand for U.S. Treasury Securities (USTs) may signal a capital shift toward riskier assets, including Bitcoin.
Historically, the correlation between M2 (a measure of money supply), which represents global liquidity, and Bitcoin’s price movement has been notable.
During significant periods of price growth fueled by liquidity-driven inflows, social media activity often experiences a spike in frequency. This heightened interest across retail and institutional investors can be seen as a leading indicator of market engagement.
Currently, the Bitcoin Social Volume metric is trending upward, although it remains below levels observed during the 2021 bull market.
The delayed response in Social Volume corresponds with the slight lag in Bitcoin’s reaction to M2 liquidity inflows, which is consistent with historical data.
If this metric rises further, it could signal increased participation and a strengthening of the bull trend.
However, subdued activity might indicate hesitation among traders, potentially leading to slower price growth.
Monitoring this metric alongside liquidity trends and technical support levels can offer early signals for sustained upward momentum.
Network activity as a bullish indicator
Higher network activity aligns with periods of increased price momentum, with more participants indicating stronger demand. Recent data shows a steady rise in active addresses, reflecting renewed interest among traders and investors.
This coincides with the slight uptick in global M2 liquidity and Bitcoin’s recent price recovery.
The pattern supports the notion that liquidity inflows drive market activity, albeit with some delay.
If active addresses continue to increase, it suggests growing confidence within the network and reinforces a potential bull market.
However, stagnation or decline in activity could suggest hesitation or profit-taking among participants.
Bitcoin’s recent price growth highlights its sensitivity to global liquidity trends as depicted by the correlation with 30DMA in the chart.
Despite ongoing quantitative tightening from the Federal Reserve, the slight uptick in global liquidity and decreasing UST demand has provided a foundation for Bitcoin’s growth.
The current shift from fear to cautious optimism indicates improving sentiment, while rising social engagement reflects growing interest.
Moreover, increasing active addresses signal strengthening network activity.
Going forward, the interplay between global liquidity, market sentiment, and network activity will remain essential.
If systemic risks prompt Federal Reserve intervention, it could lead to an accelerated bull run driven by renewed capital inflows.
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Source: ambcrypto.com
