How the global liquidity drives Bitcoin price growth
Bitcoin price fluctuations are often evaluated using on-chain metrics, technical indicators and macroeconomic trends. One of the most underestimated yet significant factors in the price campaign of Bitcoin is global liquidity. Many investors can be subject to or even misunderstand this metric as it affects the cyclical trends of BTC.
Effects on Bitcoin
In view of increasing discussions on platforms such as Twitter (X) and analysts that analyze liquidity diagrams, understanding the relationship between global liquidity and bitcoin for dealers and long -term investors is of crucial importance. However, recent deviations indicate that traditional interpretations may require a more differentiated approach.
The global M2 money supply relates to the overall care of the liquid money supply, including cash, the review of deposits and easily convertible close-appropriation. When the global M2 is expanding, capital traditionally is looking for higher assets, including Bitcoin, stocks and raw materials. Conversely, risk assets are falling when M2 contract agreements often decrease due to stricter liquidity conditions.
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In the past, Bitcoins have followed the global M2 expansion, which increases when liquidity increases and suffers during the contractions. In this cycle, however, we saw a deviation: Despite a steady increase in the global M2, Bitcoin’s prices have shown inconsistencies.
Change compared to the year
Instead of simply pursuing the absolute value of the global M2, a more revealing approach is to analyze the change rate compared to the previous year. This method makes up the speed of the liquidity expansion or contraction and shows a clearer correlation with the performance of Bitcoin.
If we compare the Bitcoin return (YOY) with the global M2-Yoy change, a much stronger relationship arises. Bitcoin’s strongest bull runs correspond to the periods of rapid liquidity expansion, while contractions precede the price declines or longer phases of consolidation.
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For example, the global M2 rose steadily during Bitcoin’s consolidation phase in early 2025, but its change rate was flat. Only if the expansion of M2 is noticeably accelerated can Bitcoin break out towards new heights.
Liquidity delay
Another important observation is that global liquidity does not immediately have Bitcoin. Studies indicate that Bitcoin after global liquidity changes remains by about 10 weeks. By moving the global liquidity indicator by 10 weeks, the correlation with Bitcoin increases significantly. However, further optimization suggests that the most precise delay is about 56 to 60 days or about two months.
Bitcoin view
During the most part of 2025, global liquidity was in a flattening phase after a significant extent at the end of 2024, which brought Bitcoin to new heights. This flattening fell together with the consolidation and withdrawal of Bitcoin to around 80,000 US dollars. However, if there are historical trends, a recently resurrected revival in liquidity growth should lead to another leg for BTC until the end of March.
Diploma
The monitoring of global liquidity is an essential macro indicator for the expectation of the Bitcoin flight. Instead of relying on static M2 data, concentrating on the change rate and understanding the two-month delay effect, however, a much more precise predictive framework.
If the global economic conditions develop and the central banks adapt their monetary policy, Bitcoin’s price action will continue to be influenced by liquidity trends. The coming weeks will be central; Bitcoin could be ready for a big step if global liquidity continues its renewed acceleration.
Did that enjoy that? In our latest guide to mastering Bitcoin-on-chain data, you can find more about Bitcoin price shifts and market cycles.
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Disclaimer: This article only serves for information purposes and should not be regarded as financial advice. Always lead your own research before making investment decisions.
