What This Chart Shows
This model regresses Bitcoin's price against the total global M2 money supply, producing a liquidity-derived fair value with an R² of 0.92. The thesis is simple: Bitcoin's price is fundamentally a function of how much fiat liquidity exists in the system.
The top panel overlays the Global Liquidity Fair Value line (cyan) against Bitcoin's actual price (white) on a log scale, with valuation bands emanating outward. The inset window zooms into the last 90 days. The info box shows current BTC price, model fair value, deviation percentage, and the liquidity Z-score with its percentile rank.
The middle panel is the Liquidity Z-Score — a standardized measure of how cheap or expensive Bitcoin is relative to the amount of money in the global system. Green means Bitcoin is cheap relative to liquidity (deep discount), while red means it's stretched beyond what liquidity alone would justify.
The bottom bar chart breaks down median 6-month forward returns by valuation zone. Deep discount readings have historically delivered +75% median returns with a 97% win rate.
How to Read It
Focus on the Z-score panel. When it's below -1.0, Bitcoin is pricing in significantly less than the liquidity backdrop supports — historically one of the strongest buy signals. The deviation percentage in the info box gives you a quick read: negative means Bitcoin is below fair value.
Frequently Asked Questions
How does global liquidity affect Bitcoin price?
Bitcoin's price is strongly correlated with the total global M2 money supply (R²=0.92). When central banks expand the money supply, more fiat liquidity flows into risk assets including Bitcoin. This model quantifies that relationship by deriving a liquidity-based fair value — when Bitcoin trades below it, the asset is cheap relative to the amount of money in the system.
What is the Bitcoin vs global liquidity correlation?
The correlation between Bitcoin price and global M2 money supply has an R² of 0.92, meaning 92% of Bitcoin's price movement can be explained by changes in global liquidity. This chart shows the relationship visually with a Z-score measuring how far Bitcoin deviates from what liquidity alone would predict.
Is Bitcoin cheap or expensive vs M2 money supply right now?
Check the live chart above. The Z-score panel shows whether Bitcoin is currently at a discount (green, negative Z-score) or premium (red, positive Z-score) to its liquidity-derived fair value. The deviation percentage in the info box gives you the exact discount or premium.
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