I want to expand a bit on market liquidity and why modeling it is so crucial to the economy, inflation, and money management.
Liquidity is the progenitor of Pento Portfolio Strategies’ Inflation Deflation and Economic Cycle model. It is the primary force behind what drives the inflation/deflation dynamic and, ultimately, the direction of stocks, bonds, currencies, and commodities. The Factors affecting liquidity are bank lending practices, the level of real interest rates, debt and deficits, credit spreads, financial conditions, the direction of the Fed 's balance sheet, the RRP, and the TGA.
This was the case in post-COVID era of helicopter money. Governments sent out checks, and they were monetized by private banks using the reserves printed by central banks. Much of this money was used to pay people not to work, resulting in the classic definition of inflation: too much money chasing too few goods. If you don't understand these fundamental concepts, you should not be managing money; or sitting at the head of a central bank.
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Bitcoin Stalls Below $100,000, Liquidity Improves Amidst Market UncertaintyBitcoin, despite a slight rebound, remains below the $100,000 mark, exhibiting a lack of market enthusiasm. While the outlook for the crypto market remains uncertain, Glassnode cofounders highlight improving liquidity conditions. This consolidation phase could pave the way for a breakout in either direction.
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Global Crypto Meltdown Sparks Liquidity Crisis and Currency WarsA sweeping cryptocurrency market crash is underway, characterized by a surge in risk aversion and a frantic scramble for liquidity. This selloff extends beyond cryptocurrencies, impacting global equities and gold markets as traders liquidate speculative assets. The situation is further fueled by a potential divergence in monetary policy, with the Federal Reserve poised to maintain its hawkish stance on inflation while other central banks consider easing measures. This scenario could lead to a surge in long-term U.S. Treasury yields and a strengthening dollar, potentially exacerbating the ongoing market volatility.
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Governance Votes in Favor of Proposal 6 to Resolve THORChain’s Liquidity CrisisCrypto Blog
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Bitcoin Faces Headwinds as Liquidity Tightens and Trump Delays Strategic ReserveBitcoin's consolidation between $90,000 and $100,000 is facing potential roadblocks. Tightening fiat liquidity, a delayed strategic BTC reserve by the Trump administration, and bearish RSI divergence raise concerns about the next bull breakout.
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Pre-Launch Liquidity Platform Boyco Goes Live With $2.2B in ‘Pre-Deposits’Through Boyco, applications can create pre-launch liquidity markets where users can deposit assets before the mainnet goes live.
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