Analysis of the Impact of Macroeconomic Factors on Bitcoin Bull Run Prices

This article analyzes the impact of global liquidity, interest rates, inflation, and Federal Reserve policies on Bitcoin bull run prices. By conducting statistical and econometric analysis on historical data since 2014, we identify the relationships between these macro factors and Bitcoin market behavior, providing insights for investment strategies.

Global Market Liquidity

Liquidity is crucial for a healthy economy, and increased liquidity drives asset prices up. We primarily use the M2 money supply to measure overall liquidity. Historically, peaks in global M2 growth have coincided with Bitcoin bull runs.

Bitcoin has experienced several significant bull runs in its history:

1. 2011-2013: During the European financial crisis, central banks increased liquidity, and Bitcoin rose from $2.93 to $329.

2. 2015-2017: Low interest rates and increased money supply continued, Bitcoin rose from $200 to $19,000.

3. 2020-2021: The pandemic stimulus measures significantly increased M2, Bitcoin rose from $10,000 to $64,000.

4. 2024: Despite moderate liquidity, Bitcoin rises from $25,000 to $85,000, demonstrating market maturity.

It is worth noting that the performance of altcoins is more consistent with global net liquidity estimates. The analysis shows that the dominance of BTC, USDT, and USDC is inversely proportional to the global money velocity.

Interest Rates and Inflation

Despite Bitcoin being designed as decentralized, it exhibits significant volatility in response to monetary policy events. Research has found that:

• Before 2013, the monetary shocks from the Federal Reserve reduced Bitcoin prices.
• After 2013, these shocks began to drive up the price of Bitcoin.
• The European Central Bank's anti-inflation shock has consistently lowered Bitcoin prices.

Since 2020, Bitcoin has been more sensitive to FOMC announcements, reacting almost immediately to the Federal Reserve's tightening. The recent CPI release also shows that Bitcoin's valuation has increased sensitivity to inflation news.

Conclusion

The relationship between Bitcoin and inflation is complex and constantly evolving. Its price dynamics are closely tied to the global liquidity situation, driven by central bank policies, investor behavior, and institutional investment trends.

After 2020, the price of Bitcoin significantly dropped following the Federal Reserve's tightening, highlighting speculative motives and a broader investor base. This indicates that Bitcoin has evolved from being an early form of borderless digital cash into an investment asset that is more sensitive to macroeconomic factors.

For the upcoming CPI release, market expectations have not changed significantly. If the actual results fall short of expectations again, it may impact the market. Investors should closely monitor these macroeconomic indicators to better understand and predict the trends in the Bitcoin market.