Price peaks and bottoms refer to turning points in a price chart where the market shifts direction.
They help traders identify trends, reversals, and potential entry/exit points.
DeFi (Decentralized Finance)
DeFi (Decentralized Finance) is a blockchain-based financial system that removes intermediaries like banks and brokers, allowing peer-to-peer transactions through smart contracts. It enables lending, borrowing, trading, and earning interest directly on decentralized platforms without paperwork or centralized control.
Market Assets
Market assets refer to financial instruments or commodities that are actively traded in markets and have a market-determined price. These are assets that investors buy and sell based on supply and demand.
Remark: Global Liquidity Index is not cover on Market assets
Types of Market Assets
- Equities (Stocks)
- Shares of companies traded on stock exchanges.
- Bonds
- Debt instruments issued by governments or corporations.
- Commodities
- Physical goods like gold, silver, oil, wheat.
- Currencies (Forex)
- Exchange of different national currencies.
- Cryptocurrencies
- Digital assets like Bitcoin, Ethereum.
- Derivatives
- Futures, options, and other contracts based on underlying assets.
Global Liquidity Index (GLI)
Global Liquidity Index (GLI)
- GLI up = bullish for crypto, possibly neutral or slightly bullish for gold (inflation hedge).
- GLI down = bearish for crypto, bullish for gold (safe haven).
The GLI aggregates major central bank balance sheets worldwide, converted to USD for consistency and expressed in trillions. It adjusts the U.S. Federal Reserve’s balance sheet by subtracting the Treasury General Account (TGA) and Reverse Repurchase Agreements (RRP) for a clearer view of U.S. liquidity. Users can customize which central banks and accounts to include.
The Core Concept: The "Risk-On" Environment
Here’s a breakdown of why a Fed rate cut is generally seen as positive for the crypto market, explained in simple terms.
### The Core Concept: The "Risk-On" Environment
The most important idea to understand is the shift between a **"Risk-Off"** and a **"Risk-On"** environment. The Federal Funds Rate is a powerful lever that controls this shift.
* **When the Fed Raises Rates (Tightening Monetary Policy):** This is a **"Risk-Off"** signal.
* **When the Fed Cuts Rates (Loosening or "Dovish" Monetary Policy):** This is a **"Risk-On"** signal.
Crypto, like tech stocks and other growth assets, is considered a **"risk asset."** Money flows more freely into risk assets during "Risk-On" environments.
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### Key Reasons Why Rate Cuts Help Crypto