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.
Bitcoin, balance sheet and liquidity: (Source: Trading View)
Central bank balance sheet: (Source: Trading View)
Central bank balance sheet: (Source: Trading View)

Post Bitcoin continues to follow liquidity, central bank balance sheet tally first appeared on CryptoSlate.

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