Bitcoin’s remarkable price surge over the past two years has a clear driver, according to macro investor Raoul Pal: global liquidity. Pal, co-founder of Real Vision, recently highlighted that nearly 89% of Bitcoin’s price movement since 2023 can be attributed to the expansion of the global money supply (M2), rather than to news headlines or market narratives.
Bitcoin’s Price Mirrors Global Money Supply
Pal’s analysis, based on a detailed correlation chart, shows that as central banks worldwide have injected trillions into the economy, Bitcoin’s price has closely tracked the rise in global M2. This liquidity influx, he argues, is the dominant force behind Bitcoin’s rally, dwarfing the impact of other factors. In Pal’s words, “almost all ‘news’ and ‘narrative’ is noise,” as the macro environment—specifically, the debasement of fiat currencies—remains the primary catalyst for Bitcoin’s ascent .
Market Volatility and Macro Events
Despite this strong macro trend, Bitcoin remains sensitive to geopolitical events. For example, a recent escalation in Middle East tensions triggered a sharp 4% drop in Bitcoin’s price, followed by a partial rebound. Such volatility, however, is seen by Pal as short-term noise compared to the overwhelming influence of global liquidity.
Bitcoin as the New Bonds?
The narrative around Bitcoin’s role in the financial system is also evolving. Prominent investor Anthony Pompliano recently described Bitcoin as “the new bonds,” suggesting that as traditional fixed-income assets face challenges, Bitcoin’s fixed supply and growing institutional acceptance could position it as a strategic reserve asset. This view is gaining traction, especially after recent policy moves in the U.S. to treat Bitcoin as a strategic reserve, with the government holding a significant amount of confiscated BTC.
What’s Next for Bitcoin?
Pal and other analysts believe that as long as global liquidity continues to expand, Bitcoin and other risk assets are likely to benefit. Pal’s models suggest that if macroeconomic indicators like the ISM index improve, Bitcoin could reach new highs, potentially even surpassing $450,000 by early 2026 . The key takeaway: tracking global liquidity is essential for understanding Bitcoin’s long-term trajectory.
“Bitcoin’s price is a mirror of global liquidity. Ignore the noise, follow the money supply.” — Raoul Pal
