TechFlow news, on February 21, Matrixport's latest weekly report, "How Liquidity and Macroeconomic Indicators Affect Bitcoin," indicated that multiple macroeconomic and liquidity factors are influencing Bitcoin's price movements. The report highlights four key factors:
First, a shift in U.S. debt issuance strategy. During Janet Yellen’s tenure, the U.S. Treasury preferred issuing short-term Treasury bills (T-bills) while minimizing long-term bond issuance, which suppressed rises in Treasury yields, reduced the attractiveness of fixed-income assets, and drove capital flows into Bitcoin and equities. However, incoming Treasury Secretary Scot Bessent may increase long-term Treasury issuance, potentially pushing up yields, tightening liquidity, and weakening demand for risk assets.
Second, the movement of the U.S. Dollar Index (DXY). As an indicator measuring the dollar's strength against a basket of foreign currencies, a stronger DXY typically signals tighter global liquidity, reducing the appeal of risk assets such as Bitcoin.
Third, the impact of inflation data. CPI and PCE are core metrics monitored by the Federal Reserve; cooling inflation could prompt the Fed to adopt a more hawkish stance, affecting market liquidity and risk appetite.
Fourth, changes in global money supply (M2). The halt in M2 contraction at the end of 2023 helped propel Bitcoin above $40,000. The report suggests that Bitcoin performs best in an environment of moderate M2 growth with controlled inflation. However, excessively rapid M2 growth could trigger rising inflation, forcing the Fed to tighten policy.
