Overview
This innovative indicator tracks worldwide liquidity by compiling M2 money supply data from 21 major economies, presenting the information in USD terms. Traders can temporally adjust the data (forward/backward by 0-24 months) to examine its relationship with cryptocurrency markets—particularly Bitcoin's price movements.
Key Features
- Global Coverage: Aggregates M2 data from North America, Europe, Asia, Latin America, Middle East, Africa, and Pacific regions
- Time-Shift Capability: Adjust alignment between liquidity data and price action with 1-month precision
- Visual Clarity: Clean graphical output with customizable display settings
Supported Economies
| Region | Included Countries |
|---|---|
| North America | US, Canada |
| Europe | Eurozone, UK, Switzerland, Russia |
| Asia | China, Japan, India, Singapore |
| Latin America | Brazil, Mexico, Colombia |
| Other Regions | UAE, South Africa, New Zealand |
Theoretical Foundation
Research by Lyn Alden (2024) demonstrates Bitcoin's unique 83% correlation with global liquidity trends—outperforming all traditional asset classes in responsiveness to monetary conditions. This establishes BTC as the premier liquidity barometer among investable assets.
👉 Discover how liquidity impacts crypto markets
Practical Application
- Chart Integration: Add the indicator to your trading platform
- Parameter Adjustment: Set forward/backward shift (0-24 months)
Correlation Analysis: Compare aligned liquidity data with:
- Bitcoin price action
- Altcoin market caps
- Traditional risk assets
Interpretation Guidelines
- Expanding liquidity → Bullish catalyst for crypto
- Contracting liquidity → Increased market pressures
- Time-shifted data reveals lead/lag patterns
FAQ Section
Q: Why USD-denominated M2?
A: This accounts for both money supply changes and currency valuation effects, creating a true global benchmark.
Q: Optimal shift period for Bitcoin?
A: Empirical testing suggests 3-6 month forward shift often shows strongest correlation.
Q: Can this predict price tops/bottoms?
A: While not predictive, it identifies high-probability environments for trend continuations.
Q: Frequency of data updates?
A: Monthly, following central bank reporting schedules.
Important Notes
- Works best as a macro framework rather than tactical trading signal
- Combines both monetary expansion and currency valuation effects
- Particularly effective for identifying multi-month trends
For deeper analysis methods:
👉 Advanced liquidity analysis techniques
Data Methodology Note:
All figures converted to USD using end-of-period exchange rates. Source data from respective central banks and statistical agencies.