Bitcoin continues to follow the liquidity plus the aggregation of central bank balance sheets

quick take

With the world facing extreme inflation, central banks are trying to keep inflation under control by shrinking balance sheets (quantitative tightening) and raising interest rates.
The blue line is Bitcoin, up about 50% year-to-date.
The orange line summarizes central bank balance sheets including the US, EU, UK, Japan and China.
The red line is the Fednet liquidity indicator. The formula is: Net Liquidity = (Federal Reserve Balance Sheet (Treasury General Account + Reverse Repo)) / Units.
All three metrics are up from their respective lows in October 2022. Major central bank balance sheets have grown from about 706 trillion to 756 trillion.
Japan and China continue to expand their balance sheets despite high inflation rates, undermining the work the US, EU and UK are trying to achieve.

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