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

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.

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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 factor of speculation, but rather a reflection of the overall economic condition. According to the model, Bitcoin is expected to experience significant price gains in 2025, coinciding with an increase in global liquidity.

Bitcoin Faces Key Price Levels and Volatility Risks

Analyst Michael van de Poppe noted that Bitcoin was unable to sustain prices above $106,000, leading to a price decline. He expects two scenarios. Either a buying opportunity will arise should Bitcoin fall below $100K, or a new rally will begin if it holds above $102.5K.

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Recent data from Coinglass indicates that Bitcoin trading volume has decreased by 51.78%, and open interest has fallen by 1.43%, suggesting a short-term decline in market participation. However, analysts suggest long-term price movements remain closely tied to global liquidity expansion.

Bitcoin’s price tends to move in tandem with global liquidity conditions. As liquidity increases, so does the potential for price growth. Additionally, investors are advised to closely monitor macroeconomic conditions, particularly developments in the money supply, as these continue to influence price action in Bitcoin.