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To delve deeper, one can track the growth of global money supply as a year-over-year change. When this figure rises, it signifies expanding liquidity; conversely, a decline indicates tightening conditions. When these trends are visually represented with green and red boxes, a pattern emerges: green boxes typically align with upward price movements, while red boxes coincide with consolidation or downturns.
Liquidity Sensitivity and Current Trends
Research indicates that Bitcoin exhibits an 8.95 times sensitivity to a 10% rise in global liquidity. In essence, if liquidity increases by 10%, Bitcoin prices can surge by nearly 90%. However, in recent weeks, while global liquidity has been on the rise, cryptocurrencies have decreased in value by about 15%.