A liquidity injection into the crypto market can occur through either a direct or indirect channel.
From a macro perspective, the likelihood of a direct liquidity injection via rate cuts currently appears overly optimistic.
March inflation rose to 3.3%, the highest level since May 2024. In this context, with inflation remaining sticky, expectations of near-term monetary easing from the Federal Reserve appear far-fetched.
Naturally, this shifts focus to the “indirect” route. As the chart below shows, for the fourth consecutive month, the U.S. manufacturing sector has remained in expansion territory based on the latest survey data.
Notably, the ISM Manufacturing PMI came in at 52.7%, indicating continued growth in economic activity.
The market response has been strongly positive.
From a crypto standpoint, some analysts have strengthened their confidence in U.S. President Donald Trump following a period of concern driven by inflationary pressures linked to geopolitical tensions surrounding the Iran conflict.
More broadly, the data has led market participants to reframe the U.S. environment as re-entering an “expansion phase,” diverging from the post-COVID slowdown regime.
In simple terms, the strong manufacturing data is signaling that the U.S. economy is still expanding, liquidity conditions are improving, and risk appetite is returning, leading markets to price out recession fears, unlike the post-COVID slowdown dynamics.
For crypto, the natural question becomes: Is the market beginning to resemble a pre-COVID-style setup once again?
ISM expansion fuels speculation of a 2017-style crypto rally
The comparison with the pre-COVID crypto cycle stems from one key reason.
Notably, the recent PMI reading of 52.7% follows three consecutive months of similar expansion, with the index holding above the 50 threshold.
This historically signals stronger liquidity phases and improving risk conditions. Importantly, markets have not seen this sustained PMI uptrend consistently since the 2020–2021 post-COVID cycle, when macro conditions remained tight and restrictive.
In this context, crypto analysts increasingly compare the current cycle to the 2017 regime. As the chart shows, ISM PMI printed at 52.7, crossing back above 51 for the fourth month.
The last two instances of this pattern occurred in January 2017 and September 2020. Both periods preceded multi-month crypto rallies.
However, the market does not yet sit in a fully bullish regime.
Historically, ISM readings above 55 have aligned with stronger liquidity surges and aggressive crypto market expansions.
While current levels remain below that threshold, four consecutive months of upward movement suggest a gradual shift toward improving risk appetite and early-stage macro expansion conditions.
If ISM breaks above this level, a 2017-style crypto cycle would therefore not be far-fetched.
Final Summary
- Rate cuts look unlikely due to sticky inflation, but manufacturing data still points to improving growth and risk appetite.
- ISM above 50 supports crypto strength, and above 55 has historically aligned with strong bull cycles.