Bitcoin could soon surpass its previous all-time high, driven by a surge in global liquidity, according to several macroeconomic analysts.

Macroeconomic Shifts and U.S. Market Trends

In recent weeks, the global macro financial outlook has shown signs of shifting. Notably, Goldman Sachs economists have lowered their estimations of the probability of a U.S. recession in 2025 from 25% to 20%. This adjustment follows the latest U.S. retail sales and jobless claims data, suggesting that the U.S. economy might be in better shape than previously feared.

Goldman Sachs analysts added that if the upcoming August jobs report, set for release on Sept. 6, continues this trend, the likelihood of a recession could drop back to 15%. This potential development has sparked confidence that the U.S. Federal Reserve might cut interest rates in September, possibly by 25 basis points.

These potential rate cuts have already begun to impact markets. U.S. stock indices, including the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average, recorded their largest weekly percentage gains of the year for the week ending on Aug. 16.

Alongside this positive news for the U.S. economy, global liquidity has begun to rise. Historically, increasing liquidity and easing recession fears have often been catalysts for bullish trends in the crypto space.

Liquidity Surge Across Global Markets

The U.S. Liquidity Flood

In the U.S., the Treasury appears poised to inject a significant amount of liquidity into the financial system. This liquidity boost could push Bitcoin past its previous all-time high of $73,700. One possible explanation is the upcoming presidential elections, where maintaining a strong economy is crucial.

The U.S. Treasury and the Fed have several tools at their disposal, including the overnight reverse repurchase agreement mechanism (RRP), which currently stands at $333 billion, down from a peak of over $2.5 trillion in December 2022. The drop in overnight RRP indicates that money market funds are moving their cash into short-term T-bills, adding liquidity to the markets.

The Treasury also announced plans to issue another $271 billion worth of T-bills before the end of December. Additionally, the Treasury could tap into its general account (TGA), which holds $750 billion, to add liquidity under the guise of avoiding a government shutdown or other fiscal needs.

If these strategies are employed, we could see anywhere between $301 billion to $1 trillion pumped into the financial system before the end of the year. Historically, Bitcoin has shown a strong correlation with periods of increasing liquidity, making a bull market likely by the end of the year.

China’s Liquidity Moves

China is also making liquidity moves, though for different reasons. The Chinese economy has shown signs of strain, with recent data revealing the first contraction in bank loans in 19 years. To counteract this pressure, the People’s Bank of China (PBoC) has been increasing its liquidity injections, adding $97 billion into the economy over the past month.

The Chinese Communist Party’s senior leadership has pledged additional policy measures to support the economy, which could include more aggressive liquidity injections. The yuan has strengthened against the U.S. dollar, providing the PBoC with more space to implement additional stimulus without triggering inflationary pressures.

The Big Picture on Global Liquidity

These liquidity moves are not happening in isolation. Central banks, including the Bank of Japan, have injected substantial amounts into the global money base, with the BoJ alone adding $400 billion. Combined with the $97 billion from the PBoC and a broader global money supply expansion of $1.2 trillion, it appears there is a coordinated effort to infuse the global economy with liquidity.

The recent decline in the U.S. dollar suggests that the Federal Reserve might be in tacit agreement with these liquidity measures, allowing for a more synchronized approach to boosting the global economy. Historically, during similar periods of liquidity expansion, Bitcoin has seen significant rallies.

Where Could the BTC Price Go?

On Aug. 5, Bitcoin and other crypto assets suffered a sharp decline due to a market crash triggered by growing recession fears. As of Aug. 19, Bitcoin is trading around the $59,000 mark, facing strong resistance between $60,000 and $62,000. For Bitcoin to truly enter its next bull phase, it needs to break above $70,000.

Analysts believe that as Bitcoin rises, other major crypto assets will follow suit. For instance, Solana could potentially soar 75% to reach $250. The current market environment is seen as a precursor to a bullish phase, with patterns observed over the past decade suggesting that gold typically moves first during periods of uncertainty or immediate liquidity injections, followed by the Nasdaq and Bitcoin.

Given that gold has already hit its all-time high, Bitcoin’s recent consolidation around $60,000 could be the calm before the storm, with $74,000 being just the “appetizer” and $250,000 potentially within reach.

The expansion of the money supply is a condition of a credit-based fractional reserve system. Without this expansion, the system risks collapse.

With the U.S., China, and other major economies injecting liquidity into the system, we’re likely to see increased demand for Bitcoin as investors seek assets that can outperform traditional investments. If these liquidity measures continue as expected, Bitcoin could be on the verge of another key rally, with the potential to break through its previous all-time high and set new records.

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