So by doing quantitative easing, they add liquidity to the system. So as I said, basically there's kind of two major components of liquidity.
Just wondering what some of those other headwinds might be for Bitcoin that you were just talking about later on in the year, though. And I've noticed that on Fed days- that's the big announcement days when Jay Powell takes the lectern- we often see Bitcoin either leading stocks up or down, and so it is that first indicator. JARED BLIKRE: Lyn, I've got to say, I love your liquidity model because that's how I look at Bitcoin as well. And so I do think that there are still hurdles ahead in the second half of this year, but so far the fundamental indicators do represent a pretty firm bottom, in my opinion. They're basically drawing cash out of their cash account, pushing it into the economy.Īnd when we get to the second half this year, assuming that the debt-ceiling impasse is resolved, we're going to see the Treasury probably filling up its cash account, which takes out liquidity from the market, while the Fed is still presumably drawing down. And so so far we are seeing kind of signs of a pretty sound bottom place.Īnd I'm concerned somewhat about later this year because based on current expectations, the Fed's going to keep withdrawing liquidity from the system, and part of why liquidity has been able to stabilize in recent months is because the Treasury is drawing- you know, they're actually providing liquidity to the market, in part because of the debt-ceiling impasse. And when liquidity is being withdrawn from the system, Bitcoin tends to do pretty poorly.Īnd so ever since quarter four of last year, we've seen kind of a flat to up liquidity condition after it was rather down throughout much of 2022. So when there's more liquidity in the market- you know, in the financial system, Bitcoin tends to do pretty well. LYN ALDEN: I think bottoms going to be a process, right? So it's hard to say for sure a bottom's in or not, but historically, Bitcoin follows liquidity indicators pretty well. And then we see the crypto prices appreciate considerably since then. I kept thinking late last year, is Binance going to go? Hasn't happened. I guess is the crypto winter over? That's the question I've been asking myself.
Joining us now to discuss what's driving Bitcoin higher is Lyn Alden, the founder of Lyn Alden Investment Strategy, a member of Swan Bitcoin's board of directors.
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