Bitcoin has historically rallied whenever central bank balance sheets gained strength relative to Global M2.
However, since 2021, central bank balance sheets have remained relatively weak, while Global M2 has continued to expand.
In other words, despite the growth in global money supply, liquidity has not flowed equally across financial markets over the past five years.
Charts like this help explain why the cryptocurrency market has experienced such weak performance in recent years.
Global M2 can keep rising indefinitely, but what matters most is the relative strength of central bank balance sheets.
This is a crucial distinction that many investors overlook when analyzing global liquidity and Bitcoin's market cycles.
What does this metric measure?
The ratio of the combined balance sheets of tracked central banks to Global M2 money supply.
However, since 2021, central bank balance sheets have remained relatively weak, while Global M2 has continued to expand.
In other words, despite the growth in global money supply, liquidity has not flowed equally across financial markets over the past five years.
Charts like this help explain why the cryptocurrency market has experienced such weak performance in recent years.
Global M2 can keep rising indefinitely, but what matters most is the relative strength of central bank balance sheets.
This is a crucial distinction that many investors overlook when analyzing global liquidity and Bitcoin's market cycles.
What does this metric measure?
The ratio of the combined balance sheets of tracked central banks to Global M2 money supply.