Raoul Pal’s Bitcoin Price Model: Is Global Liquidity the Real Market Driver?

• Raoul Pal links Bitcoin’s price to global liquidity trends, especially money supply (M2).
• Changes in Global M2 explain 89% of Bitcoin’s price movements with a 12-week lag.
• Bitcoin’s long-term price is driven by liquidity cycles, not speculation or short-term news.

Raoul Pal, founder of Global Macro Investor, has reignited the debate over the driving force behind Bitcoin’s price. He claims that the price action of Bitcoin strongly correlates with Global liquidity flows, specifically the money supply (M2). Pal suggests that Bitcoin’s long-term price behavior is more likely to follow liquidity cycles. It is less influenced by short-term news and market speculation.

Bitcoin’s Price Linked to Global Liquidity Growth

According to the analysis, 89% of the movements in the price of Bitcoin can be attributed to changes in the Global M2. The chart displays an almost perfect correlation where the price of Bitcoin tracks M2 with a 12-week lag.

Pal opined that Bitcoin is to be regarded as a macro asset. It reacts mainly to macroeconomic situations like monetary growth and debasement. According to Pal, the movement in the price of Bitcoin is not a fac…

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