The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) has a history of reflecting significant peaks in Bitcoin’s market cycles. If this trend continues, we could see a cycle extending beyond typical durations.
The relationship between the ISM PMI and Bitcoin’s price gained traction after analyst Raoul Pal highlighted it, revealing an interesting correlation among macro-focused crypto analysts.
“All 3 past Bitcoin cycle tops have broadly aligned with this monthly, oscillating index,” noted analyst Colin Talks Crypto, illustrating the repeated alignment between Bitcoin’s peak prices and the PMI’s cyclical tops.
Colin further remarked, “If that relationship holds, it would indicate a considerably longer cycle than bitcoin cycles typically run for.
Translation: If that correlation persists, it may suggest a much longer cycle compared to the standard duration of Bitcoin cycles.
The ISM Manufacturing PMI, which gauges US industrial activity, has remained under the neutral mark of 50 for seven months in a row, signaling a downturn in economic activity. A persistent rise above 50 could indicate renewed growth, which is traditionally linked to improved Bitcoin market performance.
Earlier this year, the PMI briefly surpassed 50 but has since reverted to contraction, highlighting ongoing weaknesses within the manufacturing landscape.
US Manufacturing Faces Challenges Amid Tariffs and Weak Demand
The manufacturing PMI initially showed strong optimism at the year’s outset, spurred by optimism regarding the Trump administration’s business-friendly policies.
Yet, ongoing pressures from elevated tariffs and inconsistent trade policies have slowed the sector’s momentum, potentially midwifing a prolonged business cycle.
ISM’s recent report revealed a slight increase in the PMI for September, with prices rising even as exports and imports saw declines, indicating varying conditions within manufacturing subsegments.
Despite these challenges, ISM pointed out that a contraction in manufacturing’s share of the US economy implies the PMI’s downturn does not automatically predict a recession. Historical data shows that consistent readings above 42.3 typically correlate with growth in the broader economy.
A purchasing manager in the transportation equipment sector expressed to ISM: “business continues to be severely depressed,” citing falling profits and high taxes due to tariffs, raising costs across supply chains.
“We have increased price pressures both to our inputs and customer outputs as companies are starting to pass on tariffs via surcharges, raising prices up to 20 percent,” they added.
Related Articles:
