This is actually happening on Bitcoin
Buckle up.
A thread đ§”
2/ What if I told you thereâs 1 macro force thatâs appeared before every major move Bitcoin has made over the last decade?
It showed up before Bitcoinâs 5,000% rally in 2016â2017
Before the 1,000% surge in 2020â2021
And right before the 70% crashes in 2018 and 2022
3/ Itâs a force every investor knows exists, but very few actually know how to use
Itâs called global liquidity
And believe it or not, itâs flashing another major signal right now that could tell us where Bitcoin is headed by August of this year
4/ We can track global liquidity using this chart of global M2 money supply
Which reflects the liquidity provided by the worldâs 20 largest central banks
Right now, that money supply is breaking out to the highest level ever recorded
5/ Global liquidity is largely driven by central bank interest rates
When central banks cut rates, borrowing gets cheaper
That leads to more lending and spending
Which pumps more money into the system
Causing M2 money supply to rise
6/ For example, after peaking in 2022, the US money supply started falling
And when we put the Fed Funds Rate on top, we see this decline in money supply coincided with the Fed aggressively raising rates and tightening conditions
7/ But from Aug 2023 onwards, the Fed paused its hikes and then shifted towards rate cuts
As a result, US money supply began climbing and just hit new highs
This principle applies not just for the US but for central banks around the world
8/ Today, global central banks have cut rates 64 times in the past 6 months
This is an even faster pace than 2024
The last time we saw cuts this aggressive was back in 2020 during the pandemic
So how does this affect Bitcoin?
9/ When we put Bitcoinâs price with global money supply, a clear relationship emerges
Itâs not a perfect one-to-one, but Bitcoin generally moves in the same direction as global liquidity
10/ Take 2020, for example
After the pandemic hit, central banks cut rates and money supply exploded
In response, Bitcoin surged from under $5,000 to nearly $70,000 in just 1 year
11/ In contrast, 2022 saw liquidity shrink as rate hikes kicked in
And Bitcoin fell from $70,000 to $15,000
So, when liquidity expands, Bitcoin and other risk assets rally
When it contracts, they tend to struggle
13/ Now, Bitcoin currently has a 0.51 correlation coefficient with global money supply
A correlation coefficient measures how closely the movement of two variables track each other
Hypothetically, a correlation of 1 would mean the two variables are doing exactly the same thing
A 0 correlation would mean no relationship at all
14/ That 0.51 figure is higher than the correlation of global liquidity with gold, the S&P 500, emerging markets, or treasury bonds
Itâs not perfect, but itâs a key factor influencing Bitcoinâs price
And thereâs a fundamental reason for that
15/ Bitcoin isnât tied to earnings, cash flows, or dividends
It performs best when investors are chasing risk and returns
Something they do more of when liquidity is plentiful
16/ And since Bitcoin is borderless and globally accessible, it reacts not just to US liquidity
But to capital flows from around the world
That makes it more sensitive to global liquidity than most traditional assets
17/ So how much of an impact could this have today?
Well, so far weâve only talked about the absolute level of global M2 money supply
But what markets really respond to is the rate of change - how fast liquidity is rising or falling
18/ Thatâs because investors don't just react to current conditions, they adjust their positioning based on how quickly those conditions are likely to change
This chart shows the year-over-year change in global liquidity
19/ When this chart is rising, it means liquidity is expanding
And those periods tend to align with some of the strongest Bitcoin rallies historically
20/ Research shows Bitcoin has an 8.95 sensitivity to changes in global liquidity
That means a 10% rise in global M2 has historically led to a 90% gain in Bitcoin
That extreme sensitivity explains why Bitcoin booms when liquidity rises
And experiences very tough bear markets when global capital tightens
22/ Zooming in, global liquidity has been steadily expanding in recent weeks
At first, Bitcoin didnât react and stagnated near its all-time highs
That gave us a window to take another position at Bravos Research
Since then, Bitcoin has started to break out
And we believe this is just the beginning
23/ Now, there have been moments when the Bitcoinâliquidity link broke down
Like during Covid-19 or the FTX collapse
In those cases, the correlation briefly turned negative and Bitcoin moved opposite to liquidity
24/ Thatâs the main risk to this trade: that some new event breaks the correlation again, sending Bitcoin lower despite rising liquidity
But, if the relationship holds then what kind of move should we expect?
26/ We first pointed this out in April when Bitcoin was around $80,000
And many were calling for a bear market
But global liquidity told us Bitcoin would bottom and rally
And thatâs exactly what happened
27/ If the relationship continues to hold, global liquidity is signaling that Bitcoin could rally to $170,000 by September 2025
Keep in mind though, the correlation between Bitcoin and liquidity is 0.51, not 1
So this isnât an exact forecast
28/ Thatâs why we use a range-based target: $160,000 to $200,000 by year-end
Depending on how strong the broader crypto market gets
29/ This outlook is why we currently hold an active Bitcoin position on our site
We havenât yet deployed capital into other crypto assets
But weâre watching closely and will consider new trades once we get further confirmation of a breakout across the crypto market
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