You may have heard of the "Banana Zone," but do you know when it actually arrives?

  • Note: Banana Zone refers to a special period in financial markets during which asset prices may rise sharply.

Here are 6 key metrics you don’t want to miss:

Source: X

1. Small-cap stocks and the real economy

  • Indicator 1: Russell 2000 Index ($IWM)

  • Insights: $IWM represents small-cap stocks and has recently started to break out. This index is an important indicator for assessing the health of the real economy. As corporate earnings increase, more money typically flows into these assets.

Image source: @pakpakchicken

2. Rising risk appetite

  • Indicators: Russell 2000 ($IWM) vs. Nasdaq 100 ($QQQ) Volume

  • Insight: $IWM volume also reflects the market’s risk appetite. Recently, $IWM’s trading volume surpassed $QQQ’s ($14 billion vs. $12 billion). This rare situation last occurred in 2017, indicating that investors are more inclined to "risk capital".

Image source: Eric Balchunas

3. ISM Manufacturing Index

  • Indicator 3: ISM Manufacturing Index

  • Insight: This index is critical to understanding business cycles. Its cyclical nature manifests itself approximately every four years, driving liquidity trends. Raoul Pal predicts the index will peak in mid-2025.

Image source: RaoulGMI on X

4. Fed Liquidity

  • Indicator 4: Fed’s H4.1 data

  • Insight: Monitoring the Fed’s “money printing” activities is critical because liquidity drives the cryptocurrency market. Check out H4.1 data every Thursday (ET).

Image source: MartyParty on X

5. People’s Bank of China (PBoC)

  • Indicator 5: PBoC Liquidity Injection

  • Insight: Second only to the Federal Reserve, the People's Bank of China plays an important role in global liquidity dynamics. Watch for PBoC’s liquidity injections, which are starting to show momentum.

Image source: @tomasonmarkets on X

6. Corporate FOMO

  • Indicator 6: Corporate Bitcoin Purchases

  • Insight: Big companies buying Bitcoin could spark a market frenzy. For example, Tesla bought $1.5 billion in Bitcoin in 2021, impacting the previous cycle. Watch for similar moves by other companies such as Dell.

Image source: Google

[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.

  • This article is reprinted with permission from: "Deep Wave TechFlow"

  • Original author: Crypto, Distilled