LiquidityCycle

🌍 Global Rate-Cut

* 🇪🇺Europe (ECB): Has already cut rates in response to slowing growth and easing inflation. Aim: stimulate lending and prevent deeper recession.
* 🇨🇳China (PBOC): Cutting rates to support its slowing economy, stabilizing property markets, and boosting domestic demand amid weak exports and trade tensions.
* 🇨🇦Other major central banks: Bank of Canada, RBA, and several emerging markets are also in easing mode.

🇺🇸 U.S. Federal Reserve – What’s in Play

* 🔷Inflation: Headline CPI and Core PCE trending lower; inflation expectations are anchored.
* 🔷Jobs market: Weakening, with unemployment edging up and job growth slowing — increasing the pressure for policy easing.
* 🔷Growth: Retail sales and consumer confidence showing early signs of fatigue; manufacturing PMIs remain soft.
* 🔷Financial conditions: Still relatively tight, but bond yields have been volatile, reflecting shifting rate-cut bets.

📈 Likely Scenario

* 🚨Base case (most likely): The Fed signals readiness to cut rates in Q4 2025, possibly starting with a 25–50bps cut if jobs data continue to weaken. This would align with the global easing trend and help avoid a deeper slowdown.
* 📊Market reaction:
* 🟢Equities: Relief rally possible, especially in tech and growth stocks.
* 🟢Bonds: Yields likely to fall further, boosting fixed income.
* 🟢Crypto: Historically benefits from liquidity injections; BTC and ETH could see renewed inflows, especially if the dollar weakens.

⚠️ Risks to Watch
* 🔺Sticky inflation could delay Fed cuts and shock markets.
* 🔺Geopolitical tensions (e.g., U.S.–China, trade wars) could create risk-off flows despite rate cuts.
* 🔺Policy divergence: If the Fed lags behind other central banks, the dollar could spike temporarily, pressuring commodities and crypto.

MY POV:

Global central banks are easing. The Fed is under growing pressure to follow suit, and markets are already pricing in cuts. For crypto and risk assets, the turning point will be when the Fed shifts from “wait-and-see” to “action” — that’s when liquidity conditions can flip bullish fast.

$BTC
$ETH

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Many people overlook M2, but for professional traders, this is the most daunting macro indicator when it changes direction.

📌 What is M2?
Simply put, it's the total cash + savings deposits + readily withdrawable funds. This measures the 'breathability' of money flow in the economy.
📈 When M2 increases:
• Abundant liquidity, money seeks high yields.
• Crypto and stocks surge due to 'cheap money' → widespread FOMO.
• Low interest rates → everyone can borrow, pushing asset prices up.