Bitcoin diverged from the global money supply for the first time, how to analyze liquidity more accurately?

The volatility of Bitcoin's price is often closely related to market liquidity, but many investors still lack a deep understanding of the impact of this key factor. This article will explore how global liquidity affects Bitcoin's cyclical movements and reveal potential market opportunities through the rate of change and lag effect of the M2 money supply. This article originated from an article written by Bitcoin Magazine Pro and was compiled, compiled and written by Vernacular Blockchain. (Synopsis: Is Bitcoin still a "bellwether" of global liquidity? (Background addition: Three dimensions of crypto market demand: attention, adoption, and liquidity) Bitcoin's price movements are usually analyzed through on-chain data, technical indicators, and macro economic trends. However, a grossly undervalued but extremely important factor is Global Liquidity. Many investors may not take full advantage of this indicator or even have a misunderstanding of how it affects Bitcoin's cyclical trend. 1. The impact of global liquidity on Bitcoin As discussions about global liquidity on platforms such as Twitter(X) heat up and analysts read liquidity data in depth, understanding the relationship between global liquidity and the price of Bitcoin has become a must for traders and long-term investors. However, recent moves have deviated from traditional expectations, suggesting that the market may need a more nuanced analytical perspective. The global M2 money supply refers to the sum of all liquid currencies, including cash, demand deposits, and easily convertible quasi-monetary assets. When global M2 expands, capital typically flows to high-yield assets, including Bitcoin, stocks, and commodities, driving prices up. Conversely, when M2 contracts, market liquidity tightens, and risky assets tend to face downward pressure on valuations. In the current market environment, the traditional relationship between liquidity and asset prices may be changing, which puts forward higher understanding requirements for investors. Figure 1: Global liquidity is on the rise, but Bitcoin prices have fallen recently Historical trend: The divergence of Bitcoin prices from the global M2 trend. In the past, the price of Bitcoin has typically risen as the global M2 money supply expands, and is under pressure when liquidity contracts. However, in this cycle, we have observed a clear deviation: despite the continued growth of global M2, the price action of Bitcoin has shown inconsistencies. 2. Year-over-year change: a more accurate measure of liquidity Rather than focusing solely on the absolute value of global M2, a more insightful approach is to analyze its year-on-year rate of change (YoY). This indicator reflects the speed of liquidity expansion or contraction, revealing a clearer correlation between Bitcoin's price performance and liquidity. When we compare Bitcoin's YoY Return with the global M2 YoY Change, we can see that the correlation between the two is significantly enhanced. Bitcoin's strongest bull market phases tend to occur during periods of rapid liquidity expansion. Liquidity contraction usually precedes the pullback or prolonged oscillation of the Bitcoin price. This finding suggests that investors need to pay more attention to changes in the growth rate of global liquidity, not just the absolute level of liquidity. Figure 2: Annual rate of change in global liquidity provides a clearer picture of the liquidity cycle For example, during Bitcoin's consolidation phase in early 2025, global M2 grew steadily, but its growth rate leveled off. Only when the rate of M2 expansion accelerates significantly, it is possible for Bitcoin to break new highs. 3. The lagging effect of liquidity Another key observation is that the impact of global liquidity on Bitcoin is not instantaneous. Studies have shown that Bitcoin's price typically lags around 10 weeks behind changes in global liquidity. If you move the global liquidity indicator forward 10 weeks, the correlation of Bitcoin's price action with it will increase significantly. Further optimization shows that the most accurate lag period is about 56 to 60 days, or about 2 months. This lagging effect means that investors need to consider the time delay when analyzing the impact of liquidity on Bitcoin, rather than focusing solely on the current level of liquidity. Figure 3: Correlation is strongest when liquidity data lags by two months 4. Bitcoin Outlook Global liquidity entered a sideways phase for most of 2025, after a strong expansion at the end of 2024 propelled Bitcoin to new highs. This flat liquidity period coincided with Bitcoin's consolidation and callback to about $80,000. However, if historical trends continue to work, the recent recovery in global liquidity is expected to bring a new rally to Bitcoin around the end of March. Figure 4: Liquidity is surging, but it may be a few weeks before Bitcoin really benefits 5. Conclusion Global liquidity is an important macro indicator for predicting the trend of Bitcoin. However, rather than relying on static M2 data, a more effective approach is to focus on the rate of change of M2 and understand the impact of Bitcoin's price typically lagging by about two months. As the global economic environment changes and central banks adjust their monetary policies, the price of Bitcoin will remain affected by liquidity trends. The next few weeks will be crucial – if global liquidity continues to accelerate its expansion, Bitcoin could have a major rally. Related reports Under Trump's economics, when will a new round of liquidity flow into the cryptocurrency market? The global bond market has set off a sell-off! How does Japan's 10-year government bond yield soar to a 16-year high, how does it affect the stock market? Full text of the US Bitcoin Strategic Reserve Executive Order: The Department of Finance has a special office, and all federal agencies report BTC transfer authority within 30 days 〈Bitcoin divergence from the global money supply for the first time, how to analyze liquidity more accurately?] This article was first published in BlockTempo's "Dynamic Trend - The Most Influential Blockchain News Media".