Global Liquidity vs. Bitcoin: A Short-Term Dance

Global Liquidity vs Bitcoin - 2-Week Changes (Global Liquidity Shifted Forward by 1 Week)

While this is an extremely short-term measure, the correlation remains tight - Bitcoin tends to follow our Global Liquidity index with about a one-week lag.

In Bitcoin's early years, when it was primarily seen as a speculative asset, it loosely tracked global liquidity but with extreme volatility.

Over time, as inflation concerns and central bank money printing have increased, Bitcoin's relationship with liquidity has tightened.

Looking at the chart, you'll also notice Bitcoin's volatility decreasing as its market matures, while global liquidity swings have become more erratic since COVID.

This is due to:

Massive money printing and skyrocketing debt levels

Major crises like the UK bond meltdown (2022) and the SVB collapse (2023), which caused liquidity to shift violently

Currently, Global Liquidity is pointing downward - and Bitcoin is following suit.

Important reminder: This is a short-term indicator, and moves can happen quickly in both directions.

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