Economic pain and the ring of liquidity: Why the real crypto bull market has not yet begun?

Author: hooem

Compiled by: Tim, PANews

The title of this article makes you think: "Is hooem crazy?" But after reading the full article, you will exclaim: "I must be ready for the big bull run!" Yes, Bitcoin has soared from $16,000 to $110,000 in three years, but has the real bull run really started? I know it sounds crazy, but there is evidence that: due to macroeconomic constraints, the "real" bull run has not yet started.

Although we have witnessed the largest institutional entry into Bitcoin in history, altcoins have performed poorly throughout the entire cycle, and even experienced several small bear markets during this period.

 My live video: A man in his twenties waiting for the bull market

I watched a video of Jesse on YouTube where he delves into what sparked the crypto bull runs of 2013, 2017, and 2021. No, it wasn’t just the four-year cycle at work, there were deeper drivers behind it, and those conditions haven’t coincided again since then.

I wanted to organize his video content into this post.

If you study what exactly ignited the bull market frenzy, you will find that it is not narrative logic or hope delusion, but macro liquidity mechanism, and you will find that we are only at the beginning.

Jesse mentioned the 11 rings of liquidity.

(Note: The original text is liquidity Rings of Power, where Rings of Power is quoted from the Western fantasy IP "The Lord of the Rings". This article translates it into liquidity ring)

The 12th Ring of Liquidity is about to ignite all the magic rings. I will talk about this in detail later. It has just emitted a brief burst of light like the magic rings.

If you want to know:

• Why past economic cycles collapsed
• How macroeconomic tools really fuel markets
• The key factor that finally ignited the fuse

Then you need to read this article carefully

 This chart shows the bull market "self-congratulation article" I was writing earlier today.

Why has the real crypto bull run not started yet?

We need to grasp the complete macro framework before the frenzy breaks out.

The Magic of the Liquidity Ring: The Mechanism of Capital Inflows in the Cryptocurrency Market

All big bull markets have one thing in common: they coincide with massive liquidity injections around the world. This surge in liquidity is not accidental, but stems from the role of macroeconomic regulation driven by central banks and fiscal authorities:

1. Rate cuts: Borrowing costs fall, stimulating debt-driven economic growth

2. Quantitative easing: The central bank buys government bonds and injects cash into the circulation system

3. Forward guidance (no rate hike commitment): guiding expectations by predicting future low interest rates

4. Reduce the deposit reserve ratio: banks need to keep less funds, which can increase the funds available for lending

5. Relaxing capital requirements: Reducing institutional constraints on risk-taking

6. Loan forbearance: Keeping credit flowing in the event of a default or economic downturn

7. Bank bailouts or support measures: Preventing systemic collapse and restoring market confidence

8. Massive fiscal spending: government funds are directly injected into the real economy

9. U.S. Treasury General Account TGA Fund Release Operation - Release cash from the Treasury Account into circulation to increase cash supply

10. Foreign quantitative easing policies and global liquidity: Central banks’ overseas operations affect the crypto market through capital flows

11. Emergency Credit Facility: A temporary loan program established during a crisis

These actions not only fueled the rise in prices of traditional assets. They also sparked what Jesse called a speculative frenzy. Cryptocurrencies, as the riskiest and highest-upside asset in the financial system, have historically been the biggest beneficiaries.

Each "ring" can be operated at different intensities. When several rings rotate at the same time, their effect will produce a multiplier effect like the Silmarils, igniting a prairie fire of excitement and rising prices for the entire market.

 I am ready to tell you about the powerful magic of the Twelfth Ring.

One warning against everything: economic pain

The only command that drives the 11 rings: economic pain.

Historical examples include:

2008-2009: Financial crisis → full quantitative easing, zero interest rates, emergency aid

2020: COVID-19 crash → Unprecedented global liquidity, stimulus checks, record M2 money growth

Now: We’ve seen a bear market plunge in record time, but is that enough? Markets are still firing on all cylinders, and those in power remain stubborn, especially after such a strong recovery.

More signs: The Richmond Fed's recent manufacturing employment survey data was -18, which is worse than 2020 (-12) and 2008 (-14), indicating large-scale unemployment in the industrial sector. This is exactly the data indicator used by the Federal Reserve.

No Ring of Lords has ever appeared

 Hello, is that the Ring? It's time to show off your power.

Despite the recent gains in the crypto market, the real bull run has yet to kick in. Most liquidity levers are still dormant or restricted, and while we are moving in the right direction, we are still some distance away from the final stage.

 M2 year-on-year growth is the key indicator

Without massive new liquidity injections, the conditions that fueled the frenzy in the past no longer exist.

This is why the recent market rally has been orderly, adoption-driven, and institution-led, rather than a retail-fueled, frenetic, and noisy bull market.

There simply isn't enough idle money in the financial system to create a bubble-like frenzy.

Many bull markets in history and corresponding liquidity conditions:

2013

• Interest rates remain at 0%

• Quantitative easing fully implemented

• High levels of government spending

Result: Bitcoin rose from less than $15 to over $1,000

2017

• The pace of US interest rate hikes is slow and interest rates remain low

• Japan and Europe continue to implement quantitative easing policies

• Market liquidity in 2016 continued into this year

Result: Bitcoin surged from about $1,000 to about $20,000, and the prices of other cryptocurrencies soared in tandem.

 Total market capitalization of cryptocurrencies excluding the top 10 (2017-2018)

2021

• All liquidity control measures are fully activated

• M2 money supply increased by more than 25% year-on-year

Result: Bitcoin rises to about $69,000; other asset prices soar

 Total market capitalization of cryptocurrencies excluding top 10 (2021)

In each case, a surge in liquidity preceded the bull run.

Compare with other data, and look at the year-on-year growth rate of M2 at these time points:

 I have briefly circled it for you.

Key signals: M2 and PMI

Jesse highlighted these two indicators that are consistent with long-term bull markets:

M2 Money Supply (Year-on-year growth)

Track the growth rate of broad money. Historically, every major market rally was preceded by rapid money growth. Today, M2 growth is basically flat. Although some parts have begun to hit stage highs (but they are completely incomparable with historical gains), this signal clearly shows that the market has not yet gained upward momentum.

ISM Manufacturing PMI

A reliable business cycle indicator. A reading above 50 indicates economic expansion; historical data shows that cryptocurrencies tend to rise when the Purchasing Managers' Index (PMI) approaches or exceeds 60. But in this cycle, the PMI fell back just above 50.

The data suggests that the macro environment has not yet turned, so we have not seen a true frenzy yet.

Conclusion: The bull market is still brewing

Every crypto bull run begins when the macroeconomy is in trouble and a large amount of liquidity is released.

At present, economic pain is accumulating, but the response has not yet appeared. The 11 liquidity rings are still closed. Only when economic difficulties force policymakers to take action will the environment required for a speculative frenzy really form.

Unless a massive influx of funds arrives, the crypto market will remain largely constrained, although it may continue to slowly rise.

The real bull market will start when the liquidity ring is lit, and never earlier.

 I am waiting for the pain to come, so that the good times of a new bull market can come.