The idea that Bitcoin (BTC) and Ethereum (ETH) tend to go up around 70 days after global liquidity (M2) increases is based on how liquidity drives risk asset prices—especially in speculative markets like crypto. Here's a breakdown of why this happens, particularly with the 70-day lag:
🔍 What is M2 Global Liquidity?
M2 includes:
Cash
Checking deposits
Savings accounts
Other near-money assets
When global M2 increases, it usually means central banks are easing (e.g., lowering rates, injecting liquidity), which tends to:
Increase money supply
Lower the cost of capital
Make riskier assets more attractive
💸 Why Does BTC/ETH React to M2?
Crypto = High-Beta Asset Class
BTC and ETH are risk-on assets, meaning they thrive when:
Investors are optimistic
There's more disposable capital floating around
Liquidity Flows Down the Risk Curve
When liquidity enters the system:
It first boosts safe assets (e.g., bonds, large-cap stocks)
Then mid-cap equities
Finally flows into speculative plays like crypto
Crypto’s Reaction is Delayed (~70 Days)
This 70-day lag happens because:
Institutions take time to reallocate capital
Retail follows after they see initial market strength
It takes time for M2 to affect sentiment, demand, and actual buying
📊 Empirical Backing
Analysts like Arthur Hayes, Macro Alf, and others have noted:
BTC price often correlates with global M2, with a lag of 60–90 days
Crypto tends to front-run rate cuts, but lags money supply changes
⏱️ Summary: Why the 70-Day Lag?
Cause Effect
Global M2 rises Money becomes more available
Institutions adjust portfolios Risk-on flows begin
Investors re-enter crypto Demand for BTC/ETH increases
~70 days later BTC/ETH prices begin to climb
🔍 What is M2 Global Liquidity?
M2 includes:
Cash
Checking deposits
Savings accounts
Other near-money assets
When global M2 increases, it usually means central banks are easing (e.g., lowering rates, injecting liquidity), which tends to:
Increase money supply
Lower the cost of capital
Make riskier assets more attractive
💸 Why Does BTC/ETH React to M2?
Crypto = High-Beta Asset Class
BTC and ETH are risk-on assets, meaning they thrive when:
Investors are optimistic
There's more disposable capital floating around
Liquidity Flows Down the Risk Curve
When liquidity enters the system:
It first boosts safe assets (e.g., bonds, large-cap stocks)
Then mid-cap equities
Finally flows into speculative plays like crypto
Crypto’s Reaction is Delayed (~70 Days)
This 70-day lag happens because:
Institutions take time to reallocate capital
Retail follows after they see initial market strength
It takes time for M2 to affect sentiment, demand, and actual buying
📊 Empirical Backing
Analysts like Arthur Hayes, Macro Alf, and others have noted:
BTC price often correlates with global M2, with a lag of 60–90 days
Crypto tends to front-run rate cuts, but lags money supply changes
⏱️ Summary: Why the 70-Day Lag?
Cause Effect
Global M2 rises Money becomes more available
Institutions adjust portfolios Risk-on flows begin
Investors re-enter crypto Demand for BTC/ETH increases
~70 days later BTC/ETH prices begin to climb
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.