Global Liquidity Surge May Spark 300% Crypto Gains by 2026

Global liquidity is on the rise, and this trend could significantly impact the crypto markets. According to experts Michael Howell and Raoul Pal, this shift in liquidity could spark the next major bull run for digital assets like Bitcoin and Ethereum.

Michael Howell, a global liquidity analyst, has identified signs of a structural liquidity wave forming. This trend is driven by the U.S. Treasury’s reduction of its cash reserves and China’s aggressive monetary easing, which includes the devaluation of the yuan, particularly against gold. Howell argues that this is not a temporary phenomenon but a long-term shift supported by increasing fiscal pressures and rising debt levels.

Raoul Pal, focusing on the crypto market, believes that crypto assets are highly sensitive to changes in liquidity, acting as "high beta" investments that react strongly to money flowing into global markets. Pal predicts that we are entering a period of exponential crypto gains, driven by liquidity, shifting narratives, and the return of retail investors. His models suggest that the crypto market cap could more than triple by 2026, potentially surpassing $10 trillion.

However, both experts caution that this bullish scenario is contingent on liquidity continuing to grow. If inflation returns or the U.S. Federal Reserve tightens monetary policy too quickly, it could halt the momentum. Volatility is also expected to remain high.

Currently, the signs are favorable. Liquidity is increasing, and crypto may once again become the top-performing asset class riding this wave. The influx of liquidity, coupled with record spot Bitcoin ETF inflows, has bolstered the most optimistic price projections for Bitcoin. As the cryptocurrency market continues its upward trajectory, several indicators suggest that the final leg of this bull run is imminent. The increasing liquidity is seen as a catalyst for further price appreciation, with analysts predicting that Bitcoin could reach new all-time highs.

The current market dynamics are influenced by a combination of technical and fundamental factors. Bitcoin, for instance, is currently trading at a critical level, the 26 EMA, which has historically served as dynamic support in strong bullish trends. A failure to hold this level could signal a more significant correction, potentially leading to a decline below the $100,000 mark. This psychological and technical level is crucial, as a breach could trigger a wave of liquidations and pessimism.

Solana, another major cryptocurrency, has also faced challenges recently. The asset plunged below the 50 EMA, indicating a loss of bullish momentum and a potential death spiral. The convergence of moving averages and the abrupt rejection of the 50 EMA have raised concerns about a more severe downside movement. The market seems to be preparing for further losses, with the $105 level acting as the next price action magnet.

Despite these challenges, the overall sentiment remains bullish. The increasing liquidity and record ETF inflows are seen as positive signs for the crypto market. Analysts predict that the next bull run could be led by Ethereum, Solana, or other altcoins, with Ethereum drawing parallels to its previous bull run when it surged from $1,400 to over $2,700. The on-chain data also supports this optimism, indicating a strong link between the M2 money supply and Bitcoin's price movements.

In conclusion, the surge in global liquidity is expected to ignite the next crypto bull run, with Bitcoin and other major cryptocurrencies poised for further price appreciation. While there are challenges and potential corrections, the overall sentiment remains bullish, with analysts predicting new all-time highs for Bitcoin and other cryptocurrencies. The next few months will be crucial in determining the direction of the crypto market, with liquidity and technical levels playing a significant role in shaping the market dynamics.