Net liquidity and moving average

Since March 2020, one of the most useful physical models for tracking the top of the S&P 500 index and Bitcoin cycle time is net liquidity, which is the most original physical model of 42 Macro. Net liquidity tracks the total assets of the Federal Reserve, the general balance of the US Treasury and the change of the reverse repurchase system. Relatively low net liquidity represents a reduction of assets suitable for market deployment. It is not difficult to find that this is the key macro indicator to evaluate the current liquidity situation and the trading rules of Bitcoin in the market.

Bitcoin has been acting as a liquidity sponge throughout its life cycle. The liquidity collapse of all markets has a profound impact on the price and movement of Bitcoin. Finally, this is one of the important driving factors of your key long-term basic theory, that is, the growth of Bitcoin is due to the constant decline of the loan currency and the expansion of the natural environment of liquidity to resist the unsustainable development of sovereign debt and deflation energy at this stage. In a short time, it is not clear when the overall liquidity will be improved again. This is a trillion-dollar problem that everyone is guessing about. Net liquidity gives the main view of this movement trajectory as a measure for updating new data every week.

Bitcoin has been relatively strong since January 2021, but on the other hand, after a period of landmark low fluctuations, we can see that the net liquidity is rising sharply every day. Since the beginning of the year, the balance of the reverse repurchase account has decreased significantly, which has promoted the price increase. Because the view of the Federal Reserve is "a little higher for a long time", it is estimated that the key CPI in 2023 will be 3.5%, and the balance sheet will flow out again. You are likely to see a net decrease in liquidity, unless there is a spontaneous or emergency reversal of the current policy

The price has exceeded the completion price of the holder in the short term. This has only happened twice in the bear market, and many things are temporary. Because the price reflects the average on-chain cost of buyers in recent years, the most important thing is to see whether the market participants want to sell here at the ex-factory price, or whether they will continue to maintain the trend

The 200-day EMA seems to be a bit rash, but many technical traders and investors based on the moment of momentum and the market measure this level, which is given meaning by this objective fact. The above improvement may mean that Bitcoin will rise again in the next few days and weeks

For Bitcoin duo, the market price at the beginning of the Spring Festival is a very promising signal. Similarly, last week, the percentage of short orders in futures trading settlement reached the highest value in the history of data information in China. Although short orders have been significantly reduced recently, it is likely that such immediate upward trend will be limited.

Although there is still a long way to go before the peak of the bull market in the past, a year after the field basically collapsed, the performance of this year so far is still hopeful.

In short, this is the beginning of 2023 full of expectations.

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