Peace be upon you
Be well everyone, I hope to read and proofread a little, not for anything but to understand where you are going..'
The specialized economic literature analyzing the cycles of monetary policy indicates that the transition from a phase of Quantitative Tightening to an environment that gradually tends toward monetary easing, whether through lowering interest rates or through an increase in liquidity, represents a variable with a structural impact on liquidity levels and investment trends.
This transition gains particular importance in markets with high sensitivity to capital costs, such as the digital asset market and specifically Bitcoin, which shows a notable correlation with global liquidity indicators.
Although there is a theoretical correlation between increased liquidity levels and rising asset valuations, empirical data shows consistency with the literature confirming that the price effect does not materialize immediately following a shift in monetary policy. The monetary transmission impact is characterized within the framework of 'Monetary Transmission Channels'.
Being gradual and dependent on intertwined interactions between liquidity, investor expectations, and accompanying fiscal policies.
The historical example of 2019 serves as an important case study in this context; despite the termination of quantitative tightening programs during that period, Bitcoin experienced a price decline from levels close to $12,000 to around $6,500. This was followed, after a period of market absorption and adjustment to the new monetary environment, by an extended upward trajectory where the asset reached approximately $69,000.
This sequence highlights that the relationship between changes in monetary policy and asset price behavior is non-linear and indirect, influenced by additional factors including global liquidity structure, risk expectations, and the pace of institutional adoption.
In this context, analytical models and estimates from several major investment institutions, including BlackRock, indicate the possibility of Bitcoin reaching levels exceeding $200,000 during future cycles, based on data related to algorithmic supply scarcity, widening institutional participation, and increasing long-term demand.
These estimates are not definitive predictions by nature but represent outputs from models based on structural assumptions and multiple scenarios.
Accordingly, characterizing current prices as 'high' is subject to a short-term framework and does not necessarily reflect valuations based on extended models. Long-term financial cycle analyses show that current price levels may be relatively low compared to expected values over the next five years, based on macroeconomic trends and supply-demand structure.
Dr. Faraj Fakhir
General and laparoscopic surgery specialist // Passionately in love with the crypto market.
