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.
Related Guides