Bitcoin's historical correlation with global liquidity has weakened as global M2 liquidity reaches record highs above $100 trillion without pushing Bitcoin to new all-time highs. Previously, Bitcoin's price movements were closely tied to liquidity expansion, but this relationship has shifted.
The rise of spot Bitcoin ETFs is a significant factor in this change, as institutional capital flows now play a larger role in influencing Bitcoin's price, alongside factors like Treasury yields and dollar strength. Additionally, geopolitical tensions and a cautious risk sentiment have tempered aggressive buying in the crypto market, despite the continued expansion of global liquidity.
Investors are divided on whether Bitcoin will eventually align with liquidity conditions or if the traditional "money printing equals Bitcoin up" theory is outdated. The current cycle suggests that Bitcoin's market dynamics have evolved, challenging long-held assumptions about its behavior in response to global liquidity changes.
Bitcoin's Correlation with Global Liquidity Weakens Amid Record M2 Growth
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