Support Behind April's Stretch: Global Liquidity Funds
Today, I want to chat about what's been happening lately. The market over the last week or two has given many peeps the illusion that the liquidity environment is loosening up again. Since mid-April, US stocks have been on the rebound, skyrocketing from $BTC to 79k, and the bullish sentiment is getting louder. This surge isn't due to any improvements in fundamentals; it's all propped up by a temporary influx of $606 billion from overseas institutions.
This cash mainly comes from three channels:
First, by adjusting bank regulatory rules and lowering reserve requirements, they've directly released $251 billion; second, a new bond market purchase plan, which is basically a sneaky form of easing, injecting $192 billion; and the remaining $163 billion comes from other supportive channels, totaling $606 billion.
The related institutions aren't admitting this is a liquidity boost; they're just rebranding it to dodge the inflation devaluation debate. You can see from the debt scale curve that it continuously shrank last year but rebounded significantly in Q1 this year, which clearly shows real cash inflow.
This move is just a temporary pre-emptive measure to address the liquidity gap caused by the tax season surge in mid-April. Once the peak tax season passes, this temporary cash will gradually exit.
Currently, cash inflow has already started to reverse, and once the short-term support funds vanish, the liquidity gap in the market will be exposed again. My conclusion is straightforward: asset prices supported by temporary liquidity will face a real test once the tide of funds recedes.
$ETH
$BTC
Today, I want to chat about what's been happening lately. The market over the last week or two has given many peeps the illusion that the liquidity environment is loosening up again. Since mid-April, US stocks have been on the rebound, skyrocketing from $BTC to 79k, and the bullish sentiment is getting louder. This surge isn't due to any improvements in fundamentals; it's all propped up by a temporary influx of $606 billion from overseas institutions.
This cash mainly comes from three channels:
First, by adjusting bank regulatory rules and lowering reserve requirements, they've directly released $251 billion; second, a new bond market purchase plan, which is basically a sneaky form of easing, injecting $192 billion; and the remaining $163 billion comes from other supportive channels, totaling $606 billion.
The related institutions aren't admitting this is a liquidity boost; they're just rebranding it to dodge the inflation devaluation debate. You can see from the debt scale curve that it continuously shrank last year but rebounded significantly in Q1 this year, which clearly shows real cash inflow.
This move is just a temporary pre-emptive measure to address the liquidity gap caused by the tax season surge in mid-April. Once the peak tax season passes, this temporary cash will gradually exit.
Currently, cash inflow has already started to reverse, and once the short-term support funds vanish, the liquidity gap in the market will be exposed again. My conclusion is straightforward: asset prices supported by temporary liquidity will face a real test once the tide of funds recedes.
$ETH
$BTC
