$BTC

How does global liquidity influence the price of Bitcoin?

The price of Bitcoin moves with global liquidity, influenced by central banks and the purchasing power of investors.

Often, in the exciting world of Bitcoin, we forget a fundamental truth: this cryptocurrency, at its core, is a digital code that users exchange when receiving traditional currencies. Think about it for a moment. Each Bitcoin transaction is, in practice, like an operation in the foreign exchange market, a pair where a digital asset crosses with a fiat currency. And like any pair, its dynamics are governed by the supply and demand of both elements.

This is where a crucial concept comes into play, often relegated in purely technical analyses: global liquidity. For there to be robust demand for Bitcoin, it is not enough to have interest and adoption; there must be real purchasing power. In other words, there must be available money, liquidity in the markets. And this liquidity, ladies and gentlemen, is not infinite.$ETH