In an analysis shared via TED's insights are based on four important indicators related to traditional finance and cryptocurrency liquidity, each of which points to sustainable growth in the near future. Below is a breakdown of its analysis:
#1 65-month liquidity cycle
Ted highlights the 65-month liquidity cycle, a historical pattern that represents the ebb and flow of liquidity in financial markets. According to his analysis, this cycle bottomed out in October 2023, signaling the beginning of a new expansion phase.
“We are now in the expansion phase, which is expected to peak in 2026,” Ted said. This forecast is in line with expected easing by central banks in response to slowing economic data over the next 18 to 24 months. Historically, increased liquidity has been a precursor to bull markets in various asset classes, including Bitcoin and the broader cryptocurrency ecosystem.
#2 Money Supply M2
The M2 money supply, which includes cash and current and easily convertible deposits near money, is another, if not the most important indicator of global liquidity. Ted points out that the rate of expansion of the M2 money supply is at its lowest levels since the 1990s.
He explained: “There is a lot of room for upside to ease liquidity conditions.” As central banks are likely to ease monetary policies to stimulate economies, increased M2 growth could lead to more capital flow into risky assets like Bitcoin.
#3 Cryptocurrency Liquidity
While liquidity has returned to cryptocurrency markets, particularly with the introduction of spot bitcoin ETFs, Ted points out that the speed of inflows has not yet reached the levels seen at the tops of the cycle. He pointed out that “the flow speed has not yet witnessed a manic phase consistent with the peaks of the cycle.”
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This suggests that despite growing interest and investment in Bitcoin, the market has not yet reached the speculative frenzy that usually precedes a major correction. This phase of measured flow can provide a more stable basis for continued price increases.
#4 Spot Bitcoin ETF Flows
Spot Bitcoin ETFs in the US have seen significant inflows, with last week alone seeing $950 million flow into US Bitcoin ETFs, the largest net inflow since March. Ted expects these flows to increase as the price of Bitcoin rises and traditional financial investors regain confidence in the asset.
“Expect these to only increase as prices rise and tradFi renews confidence in the asset again,” he said. The increasing acceptance and investment by institutional investors via ETFs is a strong bullish indicator for Bitcoin's continued rise.
Each of these factors points to a strong, sustainable bull market for Bitcoin. Grounded in traditional financial indicators and cryptocurrency data, TED's analysis provides a comprehensive view of the current and future state of the Bitcoin market. With central banks likely to ease monetary policy and institutional interest continuing to grow, conditions look set for Bitcoin's bull run to extend well into the coming years.
At press time, Bitcoin was trading at $66,602.
Featured image created with DALL·E, chart from TradingView.com
