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Global liquidity may matter more than the Fed’s next rate decision for crypto markets in September founder and managing partner at Moon Pursuit Capital
In a note shared with Cryptoprowl, Ahuja said crypto could enter another period of volatility or consolidation next month, but said a pullback would not necessarily mark the beginning of a broader downturn. Instead, weaker prices could help reset positioning, which could leave markets in better shape for the fourth quarter.
“Monetary policy, inflation, global money supply, credit creation and financial conditions are becoming increasingly important to the direction of risk assets,” Ahuja wrote. “Crypto sits particularly close to that intersection because it trades globally, around the clock, and tends to respond quickly to changes in liquidity and risk appetite,” he added.
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He also claimed that Bitcoin (CRYPTO: $BTC)’s four-year cycle is a useful framework for assessing the market, arguing that institutional adoption may have changed the character of the cycle without necessarily eliminating it. Liquidity, leverage, derivatives positioning and institutional flows can influence how the cycle develops, he said.
A September reset could therefore leave the market better positioned for October and the final quarter of the year. If liquidity improves while leverage and positioning come down, Ahuja sees a “credible scenario” toward a more bullish environment in Q4, “potentially setting the stage for a much stronger bullish phase.”
Last week, Bitcoin surged past $80,000 for the first time since mid-May. Simon-Peter Massabni, head of business development at XS.com, told Cryptoprowl that the move back above $80,000 has been supported by the “debasement trade,” U.S. Treasury bond buybacks and optimism around crypto regulation.
Bitcoin is currently trading at $77,873 per token, largely flat over the past day.
Source: finance.yahoo.com