Investors anticipate vintage bull run as key economic indicator surges to 52.7%, signaling a strong uptrend.

The prospect of a liquidity boost in the cryptocurrency market can unfold through two possible avenues. However, from a broader economic perspective, the possibility of a direct infusion of liquidity, potentially triggered by rate cuts, appears increasingly unlikely at this juncture. The latest inflation figures, which climbed to a 3.3% high in March - the highest since May 2024 - suggest that inflationary pressures are persisting, making it improbable that the Federal Reserve will implement monetary easing measures in the near term.

As a result, attention is shifting to the indirect route, where recent data from the U.S. manufacturing sector is showing promising signs of expansion. The ISM Manufacturing PMI has remained in positive territory for four consecutive months, with the latest reading coming in at 52.7%, indicating sustained growth in economic activity. This development has elicited a robustly positive response from the market, with some analysts reassessing their outlook on the U.S. economy and, by extension, the crypto market, particularly in light of the geopolitical tensions surrounding the Iran conflict and the presidency of Donald Trump.

The strong manufacturing data suggests that the U.S. economy is re-entering a phase of expansion, diverging from the slowdown that followed the COVID-19 pandemic. This, in turn, implies that liquidity conditions are improving, and risk appetite is increasing, leading to a decrease in recession fears. The natural question that arises is whether the crypto market is reverting to a pre-COVID setup. The recent PMI reading of 52.7% is notable, as it marks the fourth consecutive month of expansion, with the index holding above the 50 threshold, historically a sign of stronger liquidity phases and improving risk conditions.

The comparison to the pre-COVID crypto cycle is apt, given that the sustained PMI uptrend has not been seen consistently since the 2020-2021 post-COVID cycle, when macro conditions were tight and restrictive. Crypto analysts are drawing parallels between the current cycle and the 2017 regime, where ISM PMI readings above 51 preceded multi-month crypto rallies. While the market is not yet in a fully bullish regime, the current levels, although below the 55 threshold that has historically aligned with strong liquidity surges and aggressive crypto market expansions, suggest a gradual shift toward improving risk appetite and early-stage macro expansion conditions.

If the ISM were to break above the 55 level, it would not be unreasonable to anticipate a 2017-style crypto cycle. In summary, despite the unlikelihood of rate cuts due to sticky inflation, the manufacturing data points to improving growth and risk appetite, with ISM readings above 50 supporting crypto strength and above 55 historically aligning with strong bull cycles.