Liquidity determines the market trend that follows.

In the past two years in the crypto space, you haven't frequently heard a term: Liquidity. The market is not good, the bull market hasn't arrived, altcoins are not rising, and the market is declining; it seems that someone always says it's due to insufficient liquidity.
So what exactly is liquidity? Let me explain "liquidity" in simple terms (here it refers to global macroeconomic liquidity, not the liquidity of a specific currency or single market).
Most people who make money don't wish to spend it all at once; they save it to spend gradually. Some people will keep the money in their wallets or transfer it to third-party payment tools, so they can spend it whenever they want.
Our forms of "saving money and storing water" are different, and the timing and convenience of spending money also vary. If the money is in our wallet, we can use it at any time. However, if we have already deposited the money in a fixed term, we must withdraw it first to use it.
The phrase "use it as you wish" relates to a concept in finance - Liquidity. Liquidity refers to the ease and speed with which an "asset" can be converted into "cash."
Liquidity also has multiple subdivisions, such as MO M1 M2, among which M2 is one of the important signals in economic activity.
It reflects the liquidity conditions of the currency market and the activity level of economic activities. The government supports the real economy by increasing money supply, allowing wealth management products to flow back to banks, and converting more fiscal deposits into fixed-term deposits, which will increase the scale of M2. This means an increase in the money supply across society, greater liquidity, more active economic activities, and a good momentum of economic growth.
So what does it have to do with our cryptocurrency circle? Let me give two relatively extreme examples.
For example, in 2020, due to the global pandemic, the Federal Reserve took emergency measures by rapidly lowering interest rates and flooding the market with liquidity, which led to a rapid increase in market liquidity and a booming bull market in the cryptocurrency space.
Starting from February 2022, it gradually stabilized, and by April, liquidity gradually decreased as the Federal Reserve began its interest rate hike cycle, leading the cryptocurrency market into a bear market.
The visibility of liquidity has a key impact on the financial markets. Therefore, the focus now is on the Federal Reserve's interest rate cut policy. It is known that there will likely be two more rate cuts this year. Many people say that the bear market has arrived, but let's leave it to the market and time to judge.