Pivot of the financial conditions: what does that mean for Bitcoin?

And what does that mean for the odds of a recession?

Looking back at the last four years in macro it has been a wild ride. 

We went from a market crash, to the largest QE effort ever to grace the earth. Then to the opposite QT effort as an attempt to fight the side effects of QE.

And now the tightening effect of QT has been completely undone by the market…

How does that affect Bitcoin? And what does that mean for the risk of a recession in the US?

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Pivot of the financial conditions: what does that mean for Bitcoin?

The takeaway

The financial conditions are getting looser. That’s what the Financial conditions index shows despite the Federal Reserve having kept interest rates high for a long time.

This is good for Bitcoin and this is good for risk assets in general. 

There is very little stress in the financial system and the amount of leverage for businesses and households is not at extreme levels. 

All that is contrary to our expectations of a recession starting this quarter. So while we are still waiting for the situation to maybe deteriorate, the path is clear for a proper bull market.

But let’s dig into the metrics to see how we reach this conclusion.

Breaking down the financial conditions