The Liquidity Flood Is Coming: Are We Near the Turn?
I am going to be traveling next week so I am publishing a lite version of the newsletter and won’t be able to share the full data on the Altcoin Screener extract. For those that don’t know, this is a lengthy Python script I have to run that takes several hours so I will resume with the usual data and format on November 17 and onward.
The Macro Backdrop: From a Slow Drip to a Flood
Over the past several months, liquidity has been rising slowly — a “drip-feed” environment where large caps like the S&P 500, Bitcoin, and gold benefited, while small caps and altcoins lagged. As Sykodelic points out, that’s about to change. The end of Quantitative Tightening (QT) and the start of stealth Quantitative Easing (QE) are setting up a major liquidity expansion that could finally lift the rest of the market.
At the same time, liquidity has been temporarily constrained by the U.S. government shutdown — a dynamic I highlighted earlier this week. Prediction markets have now flatlined, suggesting the shutdown is expected to end between November 12 – 18.
That timing could mark the point when liquidity starts accelerating again.
When shutdowns end, history favors risk assets.
- Ryan Detrick notes the S&P 500 has been higher 86% of the time a year later with average gains near 12%.
- Subu Trade confirms the same pattern: double-digit returns 12 months after government shutdowns end.
🔗 Detrick | Subu Trade
Adding fuel to that liquidity story, Satoshi Flipper highlighted that Trump’s proposed “tariff rebate checks” could resemble the 2020 stimulus payments — an injection that sent Bitcoin and equities into a frenzy. If enacted, this would add fiscal liquidity directly into consumer hands, possibly reigniting the same kind of risk-asset boom.
Market Sentiment: Fear Amid Strength
Despite indices hovering near all-time highs, fear dominates investor psychology.
Ryan Detrick observed that sentiment remains deeply negative even as markets quietly push higher — a contrarian signal that has historically marked the middle, not the end, of bull phases.
The University of Michigan Consumer Sentiment Index just logged its second-lowest reading ever (below 56).
According to The Market Stats, every similar instance since the 1970s led to positive S&P returns 12 months later, averaging +18%.
Yet warnings are surfacing too. SentimenTrader reported both the Titanic Syndrome and Hindenburg Omen have triggered — signals that often precede short-term volatility.
Still, Ryan Detrick pushed back, noting that breadth remains healthy, with many stocks still trading above their 20- and 50-day moving averages.
In other words, there’s rotation beneath the surface — not deterioration.
Bitcoin Technicals: Testing Support, Building the Base
On the crypto side, Bitcoin is testing key long-term supports.
Frank A. Fetter shows price converging between the 200-day MA and MVRV ratio, both historically strong zones for accumulation.
https://twitter.com/FrankAFetter/status/1985731366823035313?s=20
Ben Cowen warns that two consecutive weekly closes below the 50-week MA have often led to deeper drawdowns. It’s the key line to watch.
aixbt sees the current setup differently — as part of a bottoming process, valid as long as Bitcoin holds above the 50-week MA.
Adding to the bullish case, Shanaka Perera notes the Bitcoin Supply-in-Loss metric has spiked again — a pattern that has preceded every major parabolic advance in prior cycles.
https://twitter.com/shanaka86/status/1986193539378913547?s=20
And for a bit of market folklore — Whale Guru points out that the last “Beaver Moon” supermoon (Feb 2019) coincided with a major crypto rally. While not scientific, it’s a reminder that cycles often rhyme in unexpected ways.
Rotation Setup: The Altcoin Window Approaches
If Bitcoin is basing while liquidity returns, the next act could be rotation into altcoins.
Brett_eth reminds us that market regimes alternate:
- QT → BTC dominance rises
- QE → Altcoin dominance rises
With QT ending December 1, the altcoin phase may be next.
https://twitter.com/brett_eth/status/1986421758069449194?s=20
EllioTrades shared a long-term OTHERS vs BTC chart showing that each cycle’s altcoin outperformance grows stronger — suggesting Bitcoin’s dominance run may be nearing exhaustion.
Sykodelic echoed the same point: the cycle isn’t complete until altcoins outperform — a dynamic that has defined every major crypto bull market.
Equity Strength and Breadth: The Hidden Bull
While attention stays glued to rate cuts and geopolitics, equity breadth is quietly expanding. Subu Trade notes that when the Nasdaq gains more than 47% within seven months, the next year has been positive 100% of the time, with average gains near 27%. That kind of historical momentum often fuels spillover into higher-beta assets like small caps and crypto.
PMI Leading Indicators Update
US PMI came in a bit lower this month from 49.1 to 48.7. Despite this setback, leading indicators are still suggesting PMI is going higher in the coming months. Strength is returning albeit slowly. Patience is key here and a lot of data so far is showing the turn is near for PMI to go above 50 soon.
Percent of central banks cutting rates is still showing higher and no signs of declines yet:
Global M2 YoY % Change ticked slightly higher:
US Citi Earnings Revisions Index also ticked slightly higher:
Here’s a new chart that provides quarterly earnings revisions from S&P Global. I will share an update on this on a quarterly basis. This is also showing earnings revisions going higher and thus PMI should follow suit:
New Orders also went slightly higher:
Sweden PMI still above 50 suggesting global expansion in the economy is still in progress:
