Bitcoin’s Valuation Gap Amid Global Liquidity Trends
- Bitcoin has fallen approximately 35% since mid-2025, despite a global M2 money supply increase of about 12%.
- A model from CF Benchmarks suggests Bitcoin’s fair value is around $136,000, compared to its current price near $70,000.
- The Federal Reserve’s balance sheet has decreased to approximately $6.7 trillion from nearly $9 trillion in recent years, maintaining tight financial conditions.
- Rising U.S. gasoline prices could cost households an estimated $740 annually, potentially offsetting gains from larger tax refunds.
Bitcoin is trading at a significant discount relative to global liquidity trends due to the impact of U.S. monetary policy and rising energy costs on discretionary spending and risk asset investment.
This divergence highlights the influence of macroeconomic factors such as energy prices and monetary policy on Bitcoin’s valuation, with potential for alignment if financial conditions ease or geopolitical tensions stabilize. Source
