The full crypto market capitalization reached a brand new all-time excessive of $3.73 trillion on Dec. 14, 2024, however since then, the metric has dropped 21% to $2.91 trillion.
Regardless of the present drawdown, one analyst believes the metric might attain new highs in Q2 2025.
Complete market cap and world liquidity index are correlated
Mark Quant, a crypto markets researcher, presented a examine that indicated {that a} rising International Liquidity Index (GLI) might pave the restoration path for the crypto market, probably pushing the overall crypto market cap to new all-time highs above $4 trillion within the second quarter of 2025.
The International Liquidity Index (GLI) measures the benefit of financing in world monetary markets, and it may be utilized as a metric to grasp world monetary situations.
When GLI rises, it signifies that traders have entry to extra capital, which boosts threat on property corresponding to crypto.
Bitcoin and International Liquidity Index. Supply: X
As illustrated within the chart, Quant defined that the GLI and the TOTAL market cap carried a powerful 0.77 correlation with a 74-day offset. With the GLI being the main indicator, its growth usually led to a bullish development in cryptocurrencies. Whereas the market would possibly transfer sideways over the following 30 days, the analyst predicted early April might start a bullish rally. Quant mentioned,
“As soon as liquidity is absolutely priced in, $TOTAL might exceed the $4T market cap, aligning with earlier liquidity-driven cycles.”
On a broader scale, Quant’s evaluation attracts similarities to Lyn Alden’s analysis from September 2024. The research piece “Bitcoin: A International Liquidity Barometer” talked about that Bitcoin moved 83% of the time towards world liquidity in any given 12-month interval.
Bitcoin’s directional alignment with world liquidity. Supply: Lynalden.com
In comparison with different main asset courses corresponding to SPX, GOLD and VT, Bitcoin’s correlation with world liquidity is the very best. But, the crypto asset was uncovered to short-term deviations on occasion by “idiosyncratic occasions or inside market dynamics.”
Related: Why is the crypto market up today?
Is the crypto market backside in?
Though the TOTAL market cap has been down 20% over the previous 3 months, Dom, a market analyst, said it was presently testing its earlier cycle 2021 excessive and a March 2024 excessive as assist.
The analyst defined that the yearly relative quantity weight common value or rVWAP sat proper beneath the present market cap, which added additional assist to its market construction.
Dom mentioned,
“That is very clear on this month-to-month chart and provides to the concept that acceptance below present month-to-month lows would break the bull market.”
Equally, Daan Crypto, a crypto dealer, highlighted that the present weekly shut can be necessary from a bullish perspective. At present, the TOTAL crypto market cap stays below its 2021 highs, which implies there's bearish acceptance searching for dominance within the excessive time-frame chart.
Crypto Market 1 week evaluation by Daan Crypto. Supply: X
Related: Bitcoin struggles near $90K as US tariff fears spook ETF investors
This text doesn't include funding recommendation or suggestions. Each funding and buying and selling transfer entails threat, and readers ought to conduct their very own analysis when making a choice.
