Liquidity tsunami is coming: Is the new high for Bitcoin imminent, and is it a great opportunity for alts?

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Original author: Michaël van de Poppe

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Compiled by: Daisy, Mars Finance

Altcoins are turning to a bull market after experiencing the longest bear market.

For altcoins, this is definitely a terrifying bear market, and many hopes have been shattered over the past quarter.

I spent all my time studying the current situation. Various indicators are starting to turn green.

Let's dive deeper ⬇️

The multiple factors driving the market mostly come from outside the cryptocurrency space.

1 - Liquidity is increasing, so #Bitcoin is expected to rise.

This is a simple conclusion about the price trend of Bitcoin. As the M2 money supply increases, Bitcoin, being a scarce asset, will also rise. Although there are deeper macroeconomic and geopolitical fundamentals, this is an effective analytical approach.

There were original concerns that tariffs would trigger inflation, but the data proves otherwise. However, tariffs do have a short-term impact on the economy, so there is a theoretical basis for economic stimulus.

China has initiated quantitative easing, Europe has lowered interest rates, and the United States is also about to cut interest rates and expand the money supply (in simple terms: the printing press is about to start again).

This is a strong catalyst for risk assets and is likely to drive Bitcoin to a new all-time high.

2 - Gold hits a short-term peak, funds shift towards risk assets

The second important variable is that risk assets have performed extremely poorly in the past.

I firmly believe that without the approval of the ETF and Trump's administration, Bitcoin would not have reached its historical high.

ETFs inject new liquidity into the market, significantly driving up Bitcoin prices due to supply shortages. This logic is simple; understanding it allows one to foresee future trends.

Gold represents safe-haven demand, and since 2022, its performance has surpassed the S&P 500 index by 20%. The crazy thing is that the gold market has started to peak in the short term. I confirm that we are in a bull market for safe-haven assets, but there will be windows of opportunity for risk assets to rebound during this period.

We are at a turning point. Historical data shows that when gold strengthens and altcoins decline, it often signals that risk assets will have good times in the next 12-18 months.

The gold RSI indicator has reached levels not seen since 1980, while the ETH to Bitcoin weekly and monthly exchange rates have fallen to historic lows.

3 - The correlation between RMB/USD and ETH/BTC is a trigger for altcoins.

The most important indicator I use is shown in the attached diagram:

The candlestick represents the RMB/USD exchange rate.

The purple line is the ETH/BTC exchange rate.

There are several key data points worth noting:

In December 2016, when the RMB/USD hit bottom, ETH/BTC and the entire #altcoin market immediately surged.

The summer of 2019 saw the bottom of the RMB/USD, marking the bottom for ETH/BTC and ushering in a two-year altcoin bull market.

There is a corresponding relationship between the peak of the altcoin market and the strength of the RMB against the US dollar.

Several conclusions can be drawn from this:

Firstly, this month the RMB/USD exchange rate formed a long lower shadow amidst the tariff turmoil, which is likely the final bottom of the current trend. This also explains the recent weakness of altcoins - the depreciation of the RMB over the past few months has led to a decline in the cryptocurrency market.

Secondly, I deny the assertion of a four-year cycle. The market is more driven by macro factors, and it just so happens that historically it aligns with the four-year cycle. Now that institutions are entering the market, more consideration needs to be given to macroeconomic indicators, which will become increasingly important.

Just as liquidity is a key trigger for Bitcoin, charts like the RMB/USD and gold can reflect the risk appetite for altcoins.

#The altcoin market has just gone through the longest bear market in history lasting four years (the previous longest bear market in 2016 lasted only 2.5 years). The situation is reversing, which means that periods of extreme pressure and uncertainty often hold the greatest opportunities.

The macroeconomic situation is changing, and I expect to see a correction in gold, a rebound in the yuan, and a surge in altcoins.

Can you help me? If you like this article, please give it a thumbs up and save it, so that we can verify whether these predictions come true in 6 months and 12 months.