The summer of 2022 was tough for all markets. While the American stock index S&P 500 fell 26% in the January-November 2022 period, the depreciation of cryptocurrencies was more severe. bitcoinIn the same period, it lost 67% in value, causing great loss to investors. However, the risk appetite, which has increased again since the end of the year, has recovered somewhat.
Today, although the S&P 500 index is very close to its former peak, the gains in cryptocurrencies were limited. Today, while the index in question is only 7% away from the peak, Bitcoin needs to gain more than 2 times its value.
While the majority of Bitcoin and altcoin investors expect a big rise in cryptocurrencies due to their past poor performance, macroeconomic indicators require them to consider the opposite scenario.
The Money in the Market Is Decreased!
Lewis Harland, one of the leading crypto fund managers, puts the possibility of a bull market in the background for now due to the decrease in money liquidity. Harland stated that despite the optimistic expectations, he approached the markets more cautiously due to the liquidity problem.
When we compare Bitcoin price, FED and money liquidity around the world, we see that these three metrics move in parallel with each other. Loose monetary policies implemented due to the pandemic caused a large increase in the amount of money in circulation. Individuals and companies that have easier access to money, on the other hand, preferred to invest in areas such as crypto money and stocks.
In a scenario where money is more difficult to access, investors’ risk appetite often decreases. Economic actors, who somehow reach the scarce money, prefer more risk-free tools rather than areas such as crypto money.
The famous fund manager points out that the rise in Bitcoin price is interesting despite the decrease in liquidity today. Global liquidity fell to $25.6 trillion, the lowest level since the end of 2022, according to the data.
For these reasons, Harland does not expect a scenario in which rockets fly in the Bitcoin and altcoin market in the near future. Experts who separate cryptocurrencies from macroeconomics think that the rise will continue due to past performance.
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