PANews reported on March 28 that according to Matrixport analysis, the correlation between rising global liquidity and rising Bitcoin prices has certain limitations. Although the global liquidity indicator measured by the total money supply of 28 central banks (normalized to US dollars) is visually correlated with Bitcoin price trends, its prediction accuracy is questionable due to the non-stationarity of the time series and the size difference.
The analysis points out that although money supply growth may have a lagged impact on the Bitcoin market, there is no strong theoretical support for this lag time. In addition, although the correlation between Bitcoin and Nasdaq has increased slightly in recent years, it is still lower than the 60% high during the COVID period, indicating that Bitcoin trading is more driven by its own laws rather than being a proxy asset for technology stocks.
Matrixport believes that the broad consolidation of Bitcoin prices may continue, and relying solely on liquidity indicators to predict market trends may not be reliable enough. In contrast, it may be more valuable to focus on the native drivers of cryptocurrencies or macro variables with direct policy impacts (such as political leaders who support cryptocurrencies). Although market perceptions may have mathematical flaws, their widespread acceptance may still have a real impact on market behavior.
