Assessing the correlation between Bitcoin and macroeconomic data is an important step in determining long-term trends. A recent analysis shows that following central banks' balance sheets may provide deeper insights rather than just focusing on the global M2 money supply.
However, the macro picture is more complex than what simple charts may suggest. The following analysis summarizes key factors from the perspective of many leading experts in the industry.
Global Central Bank Liquidity and Its Impact on Bitcoin Price
A recent study from Alphractal shows that the liquidity flow pumped into the global economy by central banks often flows into asset markets – including stocks, gold, and cryptocurrencies – at a significantly faster rate than the expansion of the global M2 money supply. This implies that to understand the price dynamics of Bitcoin, following the central bank liquidity index provides much higher accuracy than the traditional approach based on M2.
The actual data shows that in the period from 2023 to 2025, the total liquidity of central banks worldwide fluctuates between 28 and 31 trillion USD, going through four consecutive expansion-contraction cycles. Notably, each time liquidity increases sharply, the price of Bitcoin tends to react upwards about two months later, reflecting the natural lag when capital flows from traditional channels to risk assets.
Alphractal explains:
"The liquidity of central banks worldwide tends to increase before BTC. When liquidity enters the final phase of decline, BTC often enters a sideways state. In other words, banks pump money beforehand, and a portion of that flows into risk assets like Bitcoin."
This observation helps explain the price fluctuation range of Bitcoin around 100,000 – 120,000 USD in the third quarter, a time when total liquidity remained stable below the threshold of 30 trillion USD. In other words, the price volatility of BTC is not only influenced by internal factors such as halving or ETF capital flows but is also deeply affected by the "heartbeat" of global liquidity.
From a historical perspective, analyst Quinten also adds that Bitcoin's four-year cycle bears significant similarities to the four-year cycle of central bank liquidity. This not only reinforces the crucial role of liquidity in shaping Bitcoin's value but also suggests the possibility of a new liquidity cycle forming within the next four years, with BTC likely continuing to reflect that rhythm.
USA: Public debt grows faster than liquidity
Meanwhile, Jamie Coutts, Head of Cryptocurrency Research at Realvision, adds a concerning piece to the macro picture. He warns that global financial tensions could flare up if the pace of debt increase outstrips the ability to expand liquidity, making the system increasingly fragile.
According to Coutts, global liquidity operates like a "continuous refinancing machine": debt is continuously issued to finance public spending and maintain growth, while liquidity provided by central banks must keep up to prevent collapse. However, when debt grows faster than the rate of economic growth, this imbalance can become the spark for a crisis.
The reality in the US clearly demonstrates this risk. The liquidity/public debt ratio has fallen to historic lows, indicating that the financial safety cushion is increasingly being eroded. When this ratio is high, excess capital flowing into the system will drive inflation and inflate asset prices. Conversely, when the ratio declines, funding pressure becomes intense, causing risky assets such as Bitcoin, stocks, or real estate to easily become the first victims of tightening.
"When this ratio is high, excess liquidity will drive inflation. When this ratio is low, funding pressures emerge and risk assets become vulnerable... This does not mean the cycle has ended, but it signals fragility," Jamie Coutts emphasized.
This view is reinforced by legendary investor Ray Dalio, who has long closely followed the relationship between debt cycles and economic stability. Dalio warns that U.S. public debt has escalated to dangerous levels, which could lead to an "economic heart attack" within the next three years if no fundamental solutions are found. In this context, he emphasizes that if the USD depreciates due to the debt burden, scarce supply assets like Bitcoin could emerge as an attractive alternative channel – not only for hedging currency risk but also as a new pillar in the global investment portfolio.
Bitcoin – The intersection of history and the present
While Alphractal focuses on decoding repeating historical patterns, showing a close correlation between liquidity pump-and-dump cycles and Bitcoin price volatility, Jamie Coutts and Ray Dalio take a different approach: emphasizing the existing instabilities and risks in the global financial system.
The combination of these two analytical schools paints a multi-dimensional overall picture:
Central bank liquidity as the "cyclical lever" of Bitcoin: History shows that periods of central bank balance sheet expansion often precede BTC growth by a few months. This reinforces the argument that Bitcoin responds directly to global "money flows." As liquidity increases, a portion of capital inevitably shifts to risk assets, and Bitcoin – thanks to its scarcity and cyclical growth potential – becomes an attractive destination.
US public debt is growing faster than liquidity – the risk of a financial "breakdown": Coutts warns that the system is currently functioning like a colossal refinancing machine, where the rate of debt issuance far exceeds the ability to inject liquidity. This creates a structurally imbalanced state. As the liquidity/debt ratio falls to historical lows, the market is not only vulnerable to interest rate fluctuations but also poses a risk of widespread financial crisis.
Bitcoin – an asset that is a "hybrid" between risk and hedging: This is the distinguishing feature that keeps Bitcoin in a unique position. On one hand, BTC often benefits in a liquidity surplus environment, alongside stocks and gold. On the other hand, when systemic risks rise – for example, in a scenario where the USD weakens due to public debt burdens – Bitcoin is seen by many experts, including Ray Dalio, as a strategic hedging option thanks to its fixed and decentralized supply.
In summary of these arguments, it can be seen that although experts have differing views on the main driving factors, there remains an important point of consensus: Bitcoin benefits in the long term from both liquidity expansion and the fragility of the traditional financial system. This opens up the possibility that BTC is not only a "cyclical speculative asset" but is also gradually shaping its role as a pillar in the new global financial structure – both growing and providing defense.
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This is the hidden key that could push Bitcoin into a new boom cycle.
Assessing the correlation between Bitcoin and macroeconomic data is an important step in determining long-term trends. A recent analysis shows that following central banks' balance sheets may provide deeper insights rather than just focusing on the global M2 money supply.
However, the macro picture is more complex than what simple charts may suggest. The following analysis summarizes key factors from the perspective of many leading experts in the industry.
Global Central Bank Liquidity and Its Impact on Bitcoin Price
A recent study from Alphractal shows that the liquidity flow pumped into the global economy by central banks often flows into asset markets – including stocks, gold, and cryptocurrencies – at a significantly faster rate than the expansion of the global M2 money supply. This implies that to understand the price dynamics of Bitcoin, following the central bank liquidity index provides much higher accuracy than the traditional approach based on M2.
The actual data shows that in the period from 2023 to 2025, the total liquidity of central banks worldwide fluctuates between 28 and 31 trillion USD, going through four consecutive expansion-contraction cycles. Notably, each time liquidity increases sharply, the price of Bitcoin tends to react upwards about two months later, reflecting the natural lag when capital flows from traditional channels to risk assets.
Alphractal explains:
"The liquidity of central banks worldwide tends to increase before BTC. When liquidity enters the final phase of decline, BTC often enters a sideways state. In other words, banks pump money beforehand, and a portion of that flows into risk assets like Bitcoin."
This observation helps explain the price fluctuation range of Bitcoin around 100,000 – 120,000 USD in the third quarter, a time when total liquidity remained stable below the threshold of 30 trillion USD. In other words, the price volatility of BTC is not only influenced by internal factors such as halving or ETF capital flows but is also deeply affected by the "heartbeat" of global liquidity.
From a historical perspective, analyst Quinten also adds that Bitcoin's four-year cycle bears significant similarities to the four-year cycle of central bank liquidity. This not only reinforces the crucial role of liquidity in shaping Bitcoin's value but also suggests the possibility of a new liquidity cycle forming within the next four years, with BTC likely continuing to reflect that rhythm.
USA: Public debt grows faster than liquidity
Meanwhile, Jamie Coutts, Head of Cryptocurrency Research at Realvision, adds a concerning piece to the macro picture. He warns that global financial tensions could flare up if the pace of debt increase outstrips the ability to expand liquidity, making the system increasingly fragile.
According to Coutts, global liquidity operates like a "continuous refinancing machine": debt is continuously issued to finance public spending and maintain growth, while liquidity provided by central banks must keep up to prevent collapse. However, when debt grows faster than the rate of economic growth, this imbalance can become the spark for a crisis.
The reality in the US clearly demonstrates this risk. The liquidity/public debt ratio has fallen to historic lows, indicating that the financial safety cushion is increasingly being eroded. When this ratio is high, excess capital flowing into the system will drive inflation and inflate asset prices. Conversely, when the ratio declines, funding pressure becomes intense, causing risky assets such as Bitcoin, stocks, or real estate to easily become the first victims of tightening.
"When this ratio is high, excess liquidity will drive inflation. When this ratio is low, funding pressures emerge and risk assets become vulnerable... This does not mean the cycle has ended, but it signals fragility," Jamie Coutts emphasized.
This view is reinforced by legendary investor Ray Dalio, who has long closely followed the relationship between debt cycles and economic stability. Dalio warns that U.S. public debt has escalated to dangerous levels, which could lead to an "economic heart attack" within the next three years if no fundamental solutions are found. In this context, he emphasizes that if the USD depreciates due to the debt burden, scarce supply assets like Bitcoin could emerge as an attractive alternative channel – not only for hedging currency risk but also as a new pillar in the global investment portfolio.
Bitcoin – The intersection of history and the present
While Alphractal focuses on decoding repeating historical patterns, showing a close correlation between liquidity pump-and-dump cycles and Bitcoin price volatility, Jamie Coutts and Ray Dalio take a different approach: emphasizing the existing instabilities and risks in the global financial system.
The combination of these two analytical schools paints a multi-dimensional overall picture:
In summary of these arguments, it can be seen that although experts have differing views on the main driving factors, there remains an important point of consensus: Bitcoin benefits in the long term from both liquidity expansion and the fragility of the traditional financial system. This opens up the possibility that BTC is not only a "cyclical speculative asset" but is also gradually shaping its role as a pillar in the new global financial structure – both growing and providing defense.
Taylor