Liquidity

The U.S. Federal Reserve is subtly easing financial conditions, with the key SOFR rate dropping to a three-year low. This quiet liquidity expansion is generally seen as a positive signal for risk assets like Bitcoin.

The Federal Reserve’s recent 25-basis-point rate cut reveals deeper concerns about the labor market and financial system liquidity, potentially creating favorable conditions for Bitcoin.

Solana is facing significant pressure as liquidity dries up, raising the risk of a sharp price decline. Hundreds of millions in leveraged positions are threatened, though the launch of new ETFs offers a glimmer of long-term hope.

Despite extreme fear in the crypto market, analyst Michaël van de Poppe argues that the current panic is unjustified. With the Federal Reserve injecting liquidity and key macro indicators turning positive, he believes a major bull run could be imminent.

Fed Vice Chair Michelle Bowman’s recent remarks signal a potential shift towards deregulation to boost credit flow. Analysts believe this preparation for a softer economy could increase liquidity, benefiting Bitcoin in the medium term, though short-term volatility is likely.

Economists indicate that M2 money velocity is unlikely to surge again soon, potentially pressuring Bitcoin’s price short-term, though long-term recovery may follow policy shifts.