Markets don’t move in isolation.
They move in liquidity cycles.
When global liquidity expands, risk assets breathe easier.
When liquidity contracts, leverage suffocates.
This isn’t about headlines.
It’s about capital conditions.
Loose liquidity: • Encourages leverage
• Expands multiples
• Extends trends
Tight liquidity: • Compresses valuations
• Increases volatility
• Exposes weak positioning
Retail traders ask,
“Is this bullish or bearish?”
Institutions ask,
“Is liquidity expanding or contracting?”
Because liquidity dictates tolerance for risk.
Strong trends rarely survive tightening conditions.
Weak assets rarely recover without liquidity support.
Understanding liquidity cycles shifts your lens from short-term movement
to structural sustainability.
Price is the reaction.
Liquidity is the cause.
And when you align with liquidity direction instead of chasing momentum,
your execution becomes macro-aware —
not emotionally reactive.