Will Bitcoin Catch Up With Global Liquidity?

Bitcoin has rallied over 50% from its bear market lows, then stalled while Global M2 continues reaching new highs. Over the past year, Bitcoin has still substantially underperformed global liquidity. So is that gap about to close?

 

The liquidity picture:

• Bitcoin's divergence from global liquidity is recovering but remains negative.
• Bitcoin often turns before major changes in Global M2 growth.
• The recovery suggests investors expect today's macro headwinds to ease.

 

Closing The Gap

Bitcoin's 365-day divergence from global liquidity sits at -42.1, one of the lowest readings throughout Bitcoin’s history. The reading has recovered from its recent trough, although it remains well below zero, indicating BTC has notably underperformed, or at the very least lagged M2 expansion.

 

Figure 1: Bitcoin's 365-day divergence remains negative after recovering from its recent trough.

 

Previous moves back above zero have accompanied substantial Bitcoin rallies. That's the next development I'm watching for as this gap starts narrowing.

 

First Mover

Global M2 usually rises over time, so new highs alone don't explain when Bitcoin should accelerate. Global M2 vs BTC YoY shows that liquidity growth slowed from its early-2026 peak, which helps explain Bitcoin's difficult year.

 

Figure 2: Global M2 growth slows from its early-2026 peak.

 

View Live Chart

 

Bitcoin's peaks and troughs often arrive before the major turns in liquidity growth. I see it as a canary in the coal mine, responding to an approaching policy shift before it becomes obvious elsewhere. High Yield Credit: Bitcoin Cycles shows a similar relationship. Bitcoin's cycle peaks have often preceded the highs in appetite for corporate junk bonds.

 

Figure 3: Bitcoin's cycle peaks precede the marked highs in High-Yield Credit.

 

View Live Chart

 

The rally of over 50% from Bitcoin's bear market lows tells me investors expect the current macro headwinds to ease. Bitcoin trades globally around the clock, allowing it to respond to changing expectations before traditional markets catch up.

 

Ahead Of Policy

I think Bitcoin can catch up with global liquidity and move ahead of it again. The improving divergence points towards the worst being behind us. I expect another round of monetary and fiscal expansion, and Bitcoin is already anticipating it.

 

 

I’ll be speaking at Bitcoin Amsterdam next week. If you’d like a ticket, send me a message on X and I’ll sort you out.

 

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For more on this, watch our recent YouTube video here:

Why Isn’t Bitcoin Following the Money?

 

Have a lovely weekend, and I’ll see you in the next one!

 

@MattCrosbyPro

Research Director