Key takeaways:
Bitcoin’s price closely tracks global liquidity growth, with liquidity explaining up to 90% of its price movements, according to Raoul Pal.
In the long term, global liquidity continues to expand, driven by the increasing debt levels in many countries.
On a shorter timeframe, global liquidity follows a cyclical pattern, with Michael Howell projecting the current cycle to peak by mid-2026.
Bitcoin (BTC) price is notoriously sensitive to global liquidity. Some analysts go as far as calling their correlation near-perfect, with a lag of about three months. This relationship is fueling the current bullish narrative as BTC price soars back above $100,000, but how long can this trend last?
Liquidity is Bitcoin’s silent price driver
Raoul Pal, the founder of Global Macro Investor, recently gave a speech on the strong correlation between Bitcoin and global M2 liquidity. In a recap posted by Paul Guerra, Pal’s