US Liquidity-Weighted Business Cycle

22 thg 8

📈 BTC Liquidity-Weighted Business Cycle

This indicator models the Bitcoin macro cycle by comparing its logarithmic price against a log-transformed liquidity proxy (e.g., US M2 Money Supply). It helps visualize cyclical tops and bottoms by measuring the relative expansion of Bitcoin price versus fiat liquidity.

🧠 How It Works:

Transforms both BTC and M2 using natural logarithms.

Computes a liquidity ratio: log(BTC) – log(M2) (i.e., log(BTC/M2)).

Runs MACD on this ratio to extract business cycle momentum.

Plots:

🔴 Histogram bars showing cyclical growth or contraction.

🟢 Top line to track the relative price-to-liquidity trend.

🔴 Cycle peak markers to flag historical market tops.

⚙️ Inputs:

Adjustable MACD lengths

Toggle for liquidity trend line overlay

🔍 Use Cases:

Identifying macro cycle tops and bottoms

Timing long-term Bitcoin accumulation or de-risking

Confirming global liquidity's influence on BTC price movement

Note: This version currently uses US M2 (FRED:M2SL) as the liquidity base. You can easily expand it with other global M2 sources or adjust the weights.

27 thg 8

Phát hành các Ghi chú

BTC Liquidity-Weighted Business Cycle

This indicator models Bitcoin’s macro cycle by comparing its logarithmic price to a log-transformed liquidity proxy, such as US M2 Money Supply (FRED:M2SL). The aim is to highlight cyclical expansions and contractions by tracking how Bitcoin’s price evolves relative to fiat liquidity growth.

Technical Explanation

Log Transformation: Both BTC price and M2 liquidity are expressed in natural logarithms to capture proportional changes rather than raw levels.

Liquidity Ratio: The indicator evaluates Bitcoin’s performance relative to liquidity growth by comparing log(BTC) against log(M2).

MACD Framework: A Moving Average Convergence Divergence model is applied to the ratio to extract cycle momentum, with adjustable lengths.

Visual Outputs:

Histogram bars show expansion (positive momentum) or contraction (negative momentum).

An optional overlay line tracks the long-term BTC-to-liquidity trend.

Peak markers flag potential cycle tops.

User-Friendly Overview

Think of this as a Bitcoin business cycle tracker.

When the histogram is positive, BTC is expanding faster than liquidity (risk-on conditions).

When it’s negative, BTC is underperforming liquidity (risk-off conditions).

Cycle markers give an idea of when long-term tops and bottoms may form.

Use Cases

Spotting macro cycle tops and bottoms in Bitcoin

Timing accumulation or profit-taking windows

Understanding how monetary expansion or contraction affects BTC price action

Notes

The default version uses US M2 (FRED:M2SL) as the liquidity base. Traders may extend the framework to include additional global M2 sources or custom liquidity indices with user-defined weights.