Bitcoin and the S&P 500 have broken away from global liquidity trends following Grayscale's recent court victory and a wave of AI innovations and investments.
Bitcoin's recent surge after Grayscale's recent win in its lawsuit against the SEC was accompanied by a boost in global liquidity. This measure, encompassing the Federal Reserve balance sheet (less the reverse repo and treasury general account), along with fed remittances and the balance sheets of ECB, BOJ, PBoC, and BOE, plays a crucial role in financial analyses. Historically, global liquidity, Bitcoin, and S&P moved synchronously during the Quantitative Easing (QE) phase and throughout the COVID-19 pandemic.
However, a striking divergence has been observed since June, with Bitcoin and S&P straying from the global liquidity trend. The S&P index has been riding high, likely due in part to AI-related developments, while the news of Blackrock ETF and the Grayscale lawsuit has fueled Bitcoin's upward momentum. The disconnect between these significant financial indicators and global liquidity underscores an evolving landscape in global finance, eliciting a need for a more comprehensive approach to market analysis.
