Zinger Key Points
- 10x Research indicates that macro liquidity forces may soon overshadow micro factors, setting the stage for economic recovery.
- Coordinated actions by the Bank of Japan and China’s PBoC may significantly impact Bitcoin and the broader financial markets.
Recent shifts in global macroeconomic dynamics suggest that the downturn in global growth may be coming to an end, according to a report.
What Happened: The report from from 10x Research states that the declining U.S. dollar, alongside actions by major central banks like the Bank of Japan and the People's Bank of China, signals a potential reversal in the economic slowdown that has characterized much of 2022 and 2023.
Since the launch of spot Bitcoin ETFs, there has been a surge in stablecoin activity, with $39 billion in stablecoins minted compared to $18.5 billion in ETF purchases.
While not all these stablecoins flow directly into Bitcoin, the report suggests this influx has helped stabilize the broader crypto market during times of potential correction.
However, 10x Research emphasizes that "larger macro liquidity forces may soon eclipse this ‘micro' liquidity,” indicating a shift in the market’s driving factors.
One of the key elements affecting global liquidity has been the strength of the U.S. dollar.
The report recalls how the dollar began its upward rally in February 2022, around the time of Russia’s invasion of Ukraine.
The dollar's surge had a ripple effect on global markets, making U.S. goods more expensive and pushing the U.S. ISM Manufacturing Index from an expansion territory of 58.6 to a contractionary level of 47.
"Nothing happens in isolation, and a stronger U.S. dollar is detrimental to global liquidity," the report notes, as most global debt is dollar-denominated, thereby increasing debt servicing costs.
Since July 2024, the landscape has shifted.
The U.S. dollar has declined by 6%, nearing the psychological 100 level on the DXY Dollar Index—its lowest since April 2022.
The report highlights that this 15% decline from the dollar’s post-Ukraine invasion peak could boost the U.S. ISM Manufacturing Index.
"Strong growth combined with lower U.S. interest rates will be bullish for the global economy," the report states.
Another aspect that 10x Research points out is the recent coordinated actions by the Bank of Japan and the People's Bank of China.
Both central banks waited for signals from the Federal Reserve before making their moves.
The Bank of Japan raised interest rates following the Federal Open Market Committee (FOMC) meeting on July 31, while China's PBoC held off on market stimulus until after the Sep. 18 FOMC meeting.
These strategic delays might be among the most significant developments for Bitcoin and the broader financial markets this year, potentially setting the stage for a long-term impact.
10x Research expects that the recent Bitcoin price drops, which have occurred after each of the last three ISM Manufacturing data releases, may soon come to an end.
"A more robust ISM reading, whether tomorrow or next month, will likely trigger a Bitcoin rally," the report predicts, suggesting that Bitcoin could be on the verge of breaking out to new all-time highs as the macro environment becomes more favorable.
“The weakening U.S. dollar hints that the global growth downturn may be reversing. A robust ISM report could be the beginning," the report concludes.
What’s Next: The implications of these macro shifts on digital assets and the broader crypto market will be key discussion points at Benzinga’s Future of Digital Assets event on Nov. 19.
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