Bitcoin Correlation with Global Liquidity is very strong on both magnitud and direction
- Over 2013–2024, Bitcoin’s correlation with global liquidity was 0.94, though it weakens over shorter time frames. (0.51 on 12 months, 0.36 on 6 months)
- Bitcoin moved in the same direction as global liquidity in 83% of 12-month periods and 74% of 6-month periods.
- Unlike stocks or bonds, Bitcoin’s price is driven purely by liquidity and supply-demand dynamics, because it has no dividends, earnings, or structured institutional flows like pension funds.
- Short-term price movements are more likely to be influenced by factors specific to Bitcoin rather than liquidity:
- Industry-specific shocks
- At extreme valuation levels, Bitcoin’s price action tends to be more driven by market sentiment and supply-side dynamics
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