Bitcoin Price Trends Linked to Global Liquidity Shifts

Binance CEO CZ recently addressed a user's prediction about Bitcoin price fluctuations, emphasizing the significant influence of macroeconomic factors on Bitcoin's value. This statement comes at a time when global liquidity is under close scrutiny for its impact on Bitcoin's price trends. Global liquidity, encompassing cash, demand deposits, and quasi-monetary assets, is a key driver of high-yielding assets like Bitcoin, stocks, and commodities. When global liquidity expands, capital flows into these assets, driving prices higher. Conversely, when liquidity tightens, risky assets often face valuation declines.

CZ's response underscores the importance of understanding the relationship between global liquidity and Bitcoin prices. Traders and long-term investors are increasingly focusing on liquidity data to predict market trends. However, recent trends have deviated from traditional expectations, indicating a need for a more nuanced analytical perspective. The global M2 money supply, which includes all liquid money, has shown a clear divergence from Bitcoin's price trend in this cycle. Despite the continued growth of global M2, Bitcoin's price has shown inconsistency, suggesting that investors need to pay more attention to changes in the growth rate of global liquidity rather than just the absolute level.

Analyzing the year-on-year rate of change (YoY) of global M2 provides a clearer correlation between Bitcoin price performance and liquidity. Bitcoin’s strongest bull phases tend to occur during periods of rapid liquidity expansion, while liquidity contraction usually precedes a pullback or long-term consolidation in Bitcoin prices. This finding suggests that investors need to consider the speed at which liquidity expands or contracts, rather than just the absolute level of liquidity. The impact of global liquidity on Bitcoin is not immediate; studies have shown that Bitcoin's price typically lags behind changes in global liquidity by about 10 weeks. This lag effect means that investors need to consider time delays when analyzing the impact of liquidity on Bitcoin.

For most of 2025, global liquidity entered a sideways phase after a strong expansion in late 2024 that drove Bitcoin to new highs. This liquidity sideways period coincided with Bitcoin's consolidation and pullback to around $80,000. However, if historical trends continue to hold true, the recent recovery in global liquidity is expected to bring a new round of increases in Bitcoin around the end of March.