Matrixport Investment Research: How Liquidity and Macroeconomic Indicators Affect BTC (2)

The future trend of BTC is affected by a variety of macro factors, especially the Treasurys debt issuance policy, the strength of the US dollar, and changes in the money supply. Investors are advised to pay attention to macroeconomic dynamics such as fiscal policy, changes in the US dollar, and adjustments in the money supply to cope with possible market changes.

The change of US Treasury Secretary may lead to changes in debt issuance strategy, affecting market liquidity and sentiment

During the tenure of former Treasury Secretary Janet Yellen, the U.S. Treasury adjusted its debt issuance strategy, reducing the issuance of long-term bonds and favoring short-term Treasury bills (T-bills). This strategy helped keep Treasury yields stable, weakened the attractiveness of fixed-income assets, and prompted investors to turn to riskier assets such as BTC and stocks. As market liquidity increased, investors risk appetite increased, which boosted the price of BTC.

However, with the appointment of new Treasury Secretary Scott Bessent on January 28, the Treasurys debt issuance strategy may change. If the Treasury resumes increasing the issuance of long-term bonds, it may push up bond yields, tighten market liquidity, and thus weaken the demand for risky assets. In the case of a tightening financial environment, BTCs rise may be under pressure. Therefore, investors need to pay close attention to changes in the Treasurys debt issuance policy, which will directly affect market liquidity and sentiment.

Geopolitical risk factors support the US dollar, global liquidity is tightening, and the liquidity of risky assets such as BTC is limited

The US dollar index (DXY) is one of the main macroeconomic factors that influence BTC price fluctuations. It measures the strength of the US dollar relative to a basket of foreign currencies. A stronger dollar usually means tighter global liquidity, which weakens the attractiveness of risky assets such as BTC.

On February 19, US President Trumps tough stance on Ukraine on his social media platform increased the markets geopolitical risk concerns. On February 20, the US dollar index fell 0.57%, and the BTC price rebounded to $98,415.09, up 1.83% on the day. Although geopolitical factors have supported the US dollar in the near term, the market generally expects European countries to adopt a pragmatic strategy to deal with the potential ceasefire agreement between Russia and Ukraine, which may affect the trend of the US dollar index.

Money supply expansion may drive up demand for BTC

The latest data from Jinshi shows that M2 grew by 7% year-on-year at the end of January 2025. This expansion will help improve market liquidity. At the same time, the unadjusted CPI data for January in the United States was higher than market expectations. Therefore, after the release of the CPI, the markets expectation that the Federal Reserve may cut interest rates in June rose to 60%.

(Global) Money Supply (M2), which measures the total amount of money circulating in the economy, including cash, deposits, and other liquid assets. When M2 expands, liquidity in the financial system increases, allowing for more investment capital. This excess liquidity typically leads to an increase in investors’ risk appetite, driving up demand for risky assets such as BTC.

However, if M2 continues to grow too fast, it may increase inflationary pressure, which may prompt the Federal Reserve to tighten monetary policy, thus putting pressure on risky assets such as BTC. Therefore, investors need to pay attention to changes in money supply, as well as key economic data such as CPI, to assess the trend of BTC and market liquidity trends.

مندرجہ بالا خیالات میں سے کچھ میٹرکس آن ٹارگٹ سے آتے ہیں۔ ہم سے رابطہ کریں۔ ہدف پر میٹرکس کی مکمل رپورٹ حاصل کرنے کے لیے۔

ڈس کلیمر: مارکیٹ خطرناک ہے اور سرمایہ کاری میں محتاط رہنا چاہئے۔ یہ مضمون سرمایہ کاری کے مشورے پر مشتمل نہیں ہے۔ ڈیجیٹل اثاثوں کی تجارت انتہائی خطرناک اور غیر مستحکم ہو سکتی ہے۔ سرمایہ کاری کے فیصلے ذاتی حالات پر غور کرنے اور مالیاتی ماہرین سے مشورہ کرنے کے بعد کیے جائیں۔ Matrixport اس مواد میں فراہم کردہ معلومات کی بنیاد پر سرمایہ کاری کے کسی بھی فیصلے کے لیے ذمہ دار نہیں ہے۔

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