Is a 30% pullback near? 👀
GM, this is Milk Road PRO – the newsletter designed to help you get out of your own way.
In early October we showed PRO members this chart comparing global liquidity to Bitcoin.
We said that Global Liquidity tends to lead Bitcoin by 12 weeks and thus we were due for a very strong Q4, likely post election.
Fast forward 6 weeks later and that’s exactly what happened. Bitcoin is tracking the 12-week global liquidity lead almost perfectly.
Now, let’s update this chart and look at what the next 12 weeks could have in store for us according to recent liquidity conditions.
We’ve had a decent pullback in global liquidity as of late, if Bitcoin were to track this it would mean we’re due for a pretty big pullback soon or even worse…
Is this the end of the liquidity cycle? 😣
Firstly, to be clear, at some point the Bitcoin price and 12-week global liquidity chart will decouple, it’s not a perfect science by any means.
However, there are once again concerns around high inflation and a strong US dollar, leading some to believe that we can no longer lower rates or print more money to stimulate the economy (aka pullback incoming).
On the other hand, we have Trump becoming president on January 20th, who plans to essentially “legalise” crypto in the USA and potentially create a National Strategic Bitcoin Reserve.
Not to mention we have new crypto ETF applications, stablecoin adoption at all time highs and retail beginning to flood back into the space.
Surely all of this is going to continue to push crypto to much higher prices, regardless of liquidity…right?
There is a LOT going on right now across crypto and macro and this report aims to clear the air and set the story straight on what we can expect for crypto prices in the rest of 2024 and beyond in 2025.
CRYPTO = MACRO
Do not forget the title of this section: Crypto is macro.
What this means is that crypto and macro are becoming one in the same. As financial conditions around the world ease, a larger and larger % of that capital moves into crypto.
As financial conditions tighten, capital moves out of crypto. This is how almost all markets work.
Why this is important to understand is because it doesn’t matter about better regulation or better innovation if the macro environment is not supportive of more liquidity.
Better regulation and innovation = shaking a pop bottle to activate the carbonation.
Supportive macro and more liquidity = opening the lid and dropping in a mentos.
So what does a supportive macro environment look like which allows our beloved crypto tokens to pop off?
Global Liquidity 📈
Economic Activity 📈
Inflation 📉
Interest Rates 📉
US Dollar 📉
This was what the world looked like during the 2016-17 crypto bull run and again during the 2020-21 bull run (aka ‘Macro Summer’).
Both of these runs ended when the opposite started to happen in each of these metrics. (aka ‘Macro Winter’).
P.S. If you’re new here and have yet to read our PRO report on the business cycle, its seasons and crypto, please take a second and do this now. This will help you understand much of our content moving forward, including what I’m about to get into.
So let’s take a look at where we stand today in terms of these macro metrics.
CURRENT MACRO CONDITIONS: DEC 2024
Uh, Oh… 😧 The rest of this report is exclusive to Milk Road PRO members!
WHAT’S LEFT INSIDE? 👀
5 macro indicators everyone is worried about right now (and how you should think about them)
How a reduction in global liquidity could lead to a pullback in the coming months
The reason boomers think we’re about to see a repeat of the 70’s (and why you should ignore them)
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