Is Bitcoin A Liquidity Proxy?

Understanding the Extensive and Intensive Drivers

We’re fans of Bitcoin, but not technical experts. We leave that skill to others and stick to what we know best, which is Global Liquidity. Yet, our enthusiasm has been fired-up by the clear association between the two concepts, and by the widely-observed lead-time between changes in Global Liquidity and subsequent moves in the Bitcoin price.

For the record, a few months ago we analyzed short-term changes in Global Liquidity and various assets, including Bitcoin and Ethereum. We define Global Liquidity as the flow of credits and cash savings through World financial markets and measure it in current US dollars. Our latest estimates confirm it totals around US$175 trillion. The resulting sensitivity of various assets is shown in the chart below: