What is Liquidity cycle?
The broad expansion and contraction of money available to risk assets.
Central-bank balance sheets, credit growth and fiscal spending decide how much money is looking for a home. Crypto's largest moves have coincided with shifts in that tide.
It is a slow variable and a bad timing tool: liquidity can expand for months before prices respond, and vice versa.
Related terms
- Interest rateMacro
The central-bank policy rate; higher rates tend to pull money out of risk assets.
- Risk-on / risk-offMacro
Whether investors are adding or removing risk; crypto usually trades as a risk asset.
Price multiplied by circulating supply: what the market says a coin is worth in total.