Bitcoin Faces Liquidity Tool Steam in the Global Market - Bitcoin Magazine

Bitcoin Faces Liquidity Tool Steam in the Global Market – Bitcoin Magazine

Below is an excerpt from a recent issue of Bitcoin Magazine Pro, Bitcoin Magazine Premium Markets Newsletter. To be among the first to receive these and other on-chain Bitcoin market insights straight to your inbox, subscribe now.

Liquidity in the driver’s seat

By far, one of the most important factors in any market is liquidity – which can be defined in many different ways. In this article, we cover some ways to think about global liquidity and how it affects bitcoin.

One high-level view of liquidity is that of central banks’ balance sheets. As central banks became the marginal buyer of their sovereign debt, mortgage-backed securities and other financial instruments, this provided the market with more liquidity to buy assets further on the risk curve. A seller of government bonds is a buyer of a different asset. When a system has more reserves, money, capital, etc. (no matter how one wishes to describe it), they have to go somewhere.

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