The US manufacturing PMI surprised markets this week. The ISM Manufacturing PMI at 52.6 in January, far above the 48.5 estimate and back in expansion for the first time in over a year. It was also the highest reading since mid‑2022.
The US manufacturing PMI surprised markets this week. The ISM Manufacturing PMI at 52.6 in January, far above the 48.5 estimate and back in expansion for the first time in over a year. It was also the highest reading since mid‑2022.
A PMI above 50 means factories are expanding. Orders are coming in, and businesses are buying inputs and planning output. New orders jumped to 57.1, production rose, and backlog orders turned positive. Meanwhile, employment stayed below 50.
The data was released as Bitcoin recovered slightly from its weekend sell-off. The leading digital asset dropped to $75,000 but has since recovered to $78,000 at the time of writing.
PMI is a forward-looking signal. It tracks business confidence, demand, and future activity. When PMI holds above 50, risk appetite usually improves across markets.
Historically, higher PMI is followed by stronger performance in risk assets, including equities and crypto. A move above 50 after a long contraction often leads traders to reduce defensive positioning and re‑enter risk.
However, this does not mean PMI guarantees higher prices.
Analysts caution against treating PMI as a direct Bitcoin trigger. Bret, a macro-focused analyst, that ISM is a better signal for future Federal Reserve behavior than for BTC price direction.
When ISM expands, the Fed faces less pressure to cut rates. Past cycles show mixed outcomes. In 2014-2015 and 2018-2019, ISM stayed between 52 and 59 while Bitcoin entered bear markets. Between 2023 and 2025, ISM stayed below 50 for nearly two years while Bitcoin rallied more than 700%.
The takeaway is that PMI shapes rate expectations and rates shape liquidity. Liquidity is what moves Bitcoin.
Analyst Michael van de Poppe that prior crypto bull markets occurred with ISM above 50. He also pointed out that markets just exited the longest sub‑50 period without a recession, explaining why gold and silver sold off hard.
Poppe also predicted that “we’re a lot closer to the end of the bear market.”
CryptoQuant analyst Darkfost noted that Bitcoin is entering its fifth straight month of correction. The correction began after the October 10 liquidity event, when futures open interest dropped by more than 70,000 BTC in a single day, wiping out over $8 billion. Since then, overall liquidity has continued to tighten.
Stablecoin balances on exchanges have fallen, and the total stablecoin market cap is down roughly $10 billion. Spot volumes have also declined sharply. Since October, Bitcoin spot trading volume has been cut in half. Binance volume dropped from nearly $200 billion to about $104 billion, while activity on Gate.io and Bybit also fell.
