Liquidity is Contracting

The global liquidity cycle is turning. After years of expansion, we are seeing the first signs of a systemic contraction in the M2 money supply across major economies.

The Signal

Our proprietary liquidity models have shifted from ‘Neutral’ to ‘Defensive’. This is not a drill. Historically, when the yield curve and liquidity metrics align in this specific configuration, equity and crypto volatility spikes by an average of 40% within the subsequent 90 days.

Portfolio Positioning

1. Cash Allocation: Increase stablecoin reserves to 30-40%.
2. Hedged Positions: Utilize inverse products and volatility harvesting strategies.
3. Risk Management: Tiered exit strategies for high-beta assets.

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Institutional Flow Analysis

We are seeing a silent exit from major VC wallets. On-chain forensic data suggests that $2.4B in liquidity has been moved to cold storage or stable assets in the last 72 hours.

Key Levels to Watch

• DXY: 104.5 (Resistance)
• US10Y: 4.2% (Pivot)

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