Main takeout:
According to Raoul PAL, the price of Bitcoin closely tracks global liquidity growth and describes up to 90%of price fluctuations.
In the long run, global liquidity continues to expand as the debt level of many countries increases.
For a short period of time, global liquidity follows periodic patterns. Michael Howell projected the current cycle with peak by mid -2026.
Bitcoin (BTC) prices are sensitive to global liquidity. Some analysts are far from the delay of about three months, so that the correlation is almost perfect. As the BTC price rises to more than $ 100,000, this relationship is arousing the current optimistic story, but how long can this trend last?
Liquidity is a quiet price driver of Bitcoin.
Raoul Pal, the founder of Global Macro Investor, recently spoke about the strong correlation between Bitcoin and Global M2 liquidity. In the summary posted by Paul Guerra, PAL’s message is mentioned as follows. Asset prices, designated tensions and other global stress factors repay liquidity with the dominant force of asset price behavior.
According to PAL, liquidity expansion backs up up to 90%of the bitcoin price measures and 97%of NASDAQ achievements. In fact, the chart that compares the price of the global M2 (12 -week lead) and Bitcoin shows almost cluttered alignment.
PAL also constitutes a problem in personal financial terms. He says that we all have 11%”hidden taxes” consisting of 8%currency and 3%global inflation. He pointed out.
“If you don’t earn more than 11%, you will be poorer by justice.”
Bitcoin has returned an average of 130%annually since 2012 despite a dramatic blow. As a result, it has become one of the most asymmetric betting in the last decade and is more than 99%of NASDAQ.
What is the leading global liquidity?
In the core, global liquidity is supplied with fuel by expanding money supply. As independent investor Lyn Alden said
“The currency currency system is based on the growth of the growing debt. For this reason, the money supply continues to grow in all countries.”
This provides a high level of view of global liquidity and suggests that long -term expansion is structural. But this growth is not linear. It flows based on a specific driver over a short time. The author of “Capital Wars” Michael Howell identifies banks through three major drivers who are currently affecting global liquidity: the US Federal Reserve Board, the Chinese People’s Bank (PBOC) and the Mortgage Market.
Howell also points out the indirect impact that acts as a delay of 6 to 15 months. This includes world business cycles, oil prices, dollar strength and bond market volatility. Global economic weakness and softening dollars generally increase liquidity. However, increasing bond volatility strengthens mortgage and suffocates loans to weaken liquidity.
relevant: New bull cycle? Bitcoin’s ‘important price movement’ returned to $ 100K hint.
How long will global liquidity increase?
Michael Howell believes that global liquidity is moving to about five years and is currently heading for the highest level. He mature the current cycle by mid -2012 and reached an index of about 70 (less than 90 index). It will be a turning point, and subsequent stagnation is likely to be a result.
Recently, the growth of global liquidity comes from the rapidly weakened world economy, which is likely to stimulate the further easing of the central bank. The People’s Bank of China has already begun to inject liquidity into the system. The Fed is now facing difficult choices. We continue to fight inflation or pivot to support more and more broken financial systems. At the May 7th meeting, interest rates have been steadily maintained, but the pressure on Jerome Powell is especially mounted from US President Donald Trump.
At the same time, economic uncertainty is increasing the return on the US Treasury and the volatility of the bond market, and the indicators and credit conditions of incidental shortages are being strengthened. Over time, these pressure will be a headwind for liquidity expansion. Meanwhile, the dark economic downturn is expected to weaken investor risk appetite and further emit liquidity from the system.
Even if the stagnation is ahead of 2026, global liquidity is still in place until 2025, and it is important for Bitcoin.
Howell Notes,
“The inevitable policy response to ‘more liquidity’ is a great sign of the future. It establishes a continuous upward path of continuous financial inflation that supports acid fences such as gold, quality stocks, major residential real estate and bitcoin.”
Interestingly, Howell’s fluid cycle is roughly consistent with the half of Bitcoin’s four -year period. The former points to potential in late 2025 and early 2026. If history is lucky again, the convergence can set the stage of the main price movement.
This article does not include investment advice or recommendation. All investment and trading measures include risks, and the reader must do his own research when making a decision.