On a wire This period, according to Pal, is not just a passing season, but a significant phase in the financial and cryptocurrency markets, deeply rooted in the cyclical nature of the global economy.
Why Macro/Crypto Summer Matters
Pal discusses the concept of “Macro Summer”, explaining it as a crucial phase in the “The Code of Everything” cycle, closely following the Financial Conditions Index, which historically precedes the cycle by approximately ten months. The ISM (Institute of Supply Management) index, a key indicator of economic health, often reaches its lowest level during this period, marking the beginning of GDP growth.
Pal’s thesis draws attention to the “almost perfect 3 and a half year cyclicality”in the ISM business cycle, driven by liquidity dynamics and the debt refinancing cycle at its core. He underlines the importance of liquidity: “And this is driven by liquidity, which reached its lowest point in late 2022… the macro summer and autumn is all about increasing liquidity and is a central part of the market thesis. Code of Everything.”
That liquidity inflow It’s crucial for technology stocks, which have historically thrived during these phases. However, it is Bitcoin and, more broadly, the cryptocurrency market that presents the most dramatic responses. Pal presents surprising growth numbers from the previous summer and fall macro seasons to emphasize his point:
- Bitcoin: I saw increases of “2012/2013: +146x, 2016/2017: +30x, 2020/2021: +8x…”
- Ethereum: As an altcoin during the 2016/2017 and 2020/2021 cycles, it reached “2016/2017: +1,770x, 2020/2021: +41x”.
- Altcoins (excluding ETH): I witnessed an aggregate market cap increase of “+24x” in the last cycle.
![What is Macro/Cryptocurrency Summer? Don't miss it, says expert 1 Bitcoin Summer](https://thegurumedia.com/wp-content/uploads/2024/03/GJeJJzBWsAIQDM5-1.jpg)
“Wild! When we just look at Altcoins ex-ETH (we only have shorter data from the last cycle), the entire market cap is up +24x! And that includes thousands of worthless tokens that didn’t go up, so I’m not just picking winners here ,” Pal noted.
![What is Macro/Cryptocurrency Summer? Don't miss it, says expert 2 Altcoin Summer](https://thegurumedia.com/wp-content/uploads/2024/03/GJeJnFdWoAA6z0C-1.jpg)
DOGE, a popular meme coin, is mentioned by the expert as another prime example of the “summer and fall crypto power”, with its value experiencing significant multipliers – “2016/2017: +136x, 2020/2021: +370x” – across cycles mentioned.
These numbers underscore the significant influence of macroeconomic cycles on crypto valuations, with Pal pointing out the alignment of these cycles with Bitcoin Halving Events. “The crypto summer has started and fully develops after the halving,” he states, highlighting the interconnectedness of these cycles with the broader financial landscape.
Notably, Pal’s analysis does not stop in the past; looks to the future, suggesting that liquidity is expected to increase by the end of 2025. This anticipation is rooted in a complex interplay of global financial mechanisms, including the potential for increased US money printing in response to a massive increase in cash payments. interest and changes in the Fed’s net liquidity and the Treasury’s general account (TGA).
“Will the US join the summer party? (…) I know it seems impossible right now, but the US is on the verge of a massive increase in interest payments. (…) at some point – the balance sheet will stop shrinking, which is enough to release liquidity into the system. (…) I don’t see how they don’t massively expand liquidity, in one way or another.
Meanwhile, Pal predicts that it will not be just the US that injects liquidity into financial systems in the coming months. “I have no idea whether it is China, the EU, Japan or the US that is driving this, or maybe a little bit of everything. Time will tell,” she commented.
![What is Macro/Cryptocurrency Summer? Don't miss it, says expert 3 GMI Total Liquidity Ratio](https://thegurumedia.com/wp-content/uploads/2024/03/GJeKjx2XsAA6Pgj-1.jpg)
Pal attributes his investment strategies, especially in technology and crypto, to insights gained from The Everything Code. This approach has prepared you for the upcoming Macro Summer, with a close look at the altcoin market and the so-called “Banana Zone”. He concludes:
But the bigger game is yet to be played as Alt season arrives and we fully enter the Banana Zone. The Banana Zone is coming and it is a huge wealth generating machine. Patience will be rewarded. In the meantime, don’t screw it up. #DFTU
At press time, BTC traded at $67,003.
![What is Macro/Cryptocurrency Summer? Don't miss it, says expert 4 Bitcoin Price](https://thegurumedia.com/wp-content/uploads/2024/03/BTCUSD_2024-03-25_09-33-25.png)
Featured image from Shutterstock, chart from TradingView.com
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