Title: Bitcoin: A Global Liquidity Barometer – Analyzing the Impact on Prices
I came across an intriguing article discussing the relationship between Bitcoin and global liquidity trends. The article highlighted the significant increase in global liquidity in 2024, driven by extensive money printing and debt expansion, and how it affects Bitcoin’s price movements.
The authors of the report, Lyn Alden and Sam Callahan, found that Bitcoin’s price follows global liquidity trends a remarkable 83% of the time over 12-month periods. This correlation is higher than any other major asset class, making Bitcoin a unique indicator of global liquidity.
According to the report, there is a very strong correlation of 0.94 between Bitcoin and global M2 money supply from May 2013 to July 2024. While there may be temporary breakdowns in correlation due to specific events or market cycles, the long-term relationship between Bitcoin and global liquidity persists.
With liquidity levels reaching unprecedented highs, the report suggests that Bitcoin could be on the verge of a massive bull run if this relationship holds. While no model can perfectly capture Bitcoin’s complexity, recognizing its role as a monetary indicator can provide valuable insights for investors.
In conclusion, the data presented in the report paints a clear picture of Bitcoin’s correlation to global liquidity and its potential impact on prices. As history has shown, Bitcoin’s relationship to liquidity trends can offer valuable insights for investors looking to navigate the volatile cryptocurrency market. Stay informed and keep an eye on Bitcoin’s performance as a global liquidity barometer.
