Bitcoin May Rebound Sharply After Liquidity Shocks and Policy Intervention

Macro strategist Jordi Visser believes that liquidity shocks may hit Bitcoin first during times of economic stress, but history suggests it could rebound sharply later. This is evident in its past performances during the pandemic and regional banking crisis.

The $3 trillion private credit market has been showing signs of stress, with JPMorgan marking down loans to private-credit funds due to concerns over software sector exposure. Morgan Stanley has also limited redemptions at one of its private-credit funds after investors tried to withdraw nearly 11% of the fund's outstanding shares.

Visser argues that Bitcoin often falls during liquidity shocks but historically rallies sharply after policy intervention and renewed liquidity. The cryptocurrency's sensitivity to changes in global liquidity makes it vulnerable to market downturns, but a strong rebound is likely when policymakers step in to stabilize markets.