Bitcoin Relative Macro Strength

BTC Relative Macro Strength

Overview

The BTC Relative Macro Strength indicator measures Bitcoin's price strength relative to the global macro environment. By tracking deviations from the macro trend, it identifies potentially overvalued and undervalued market phases.

The global macro trend is derived by multiplying the ISM PMI (a widely-used proxy for the business cycle) by a simplified measure of global liquidity.


Calculations

Global Liquidity = Fed Balance Sheet − Reverse Repo − Treasury General Account + U.S. M2 + China M2

Global Macro Trend = ISM PMI × Global Liquidity


Understanding the Global Macro Trend

The global macro trend plot combines the ebb and flow of global liquidity with the cyclical patterns of the business cycle. The resulting composite exhibits strong directional correlation with Bitcoin—or more precisely, Bitcoin appears to move in lockstep with liquidity conditions and business cycle phases.

This relationship has strengthened notably since COVID, likely because Bitcoin's growing market capitalization has increased its exposure to macro forces.

The takeaway is that Bitcoin is acutely sensitive to growth in the money supply (it trends with liquidity expansion) and oscillates with the phases of the business cycle.




Indicator Components

📊 Histogram: BTC/Macro Change

Displays the rolling percentage change of Bitcoin's price relative to the global macro trend.

High values: Bitcoin is outpacing macro conditions (potentially overvalued)
Low values: Bitcoin is underperforming macro conditions (potentially undervalued)

Color scheme:

🟢 Green = Positive deviation
🔴 Red = Negative deviation

📈 Macro Slope Line
Plots the scaled percentage change of the global macro trend itself.
Color scheme:

🔵 Teal = BULLISH (slope positive and rising)
⚪ Gray = NEUTRAL (slope and trend disagree)
🟣 Pink = BEARISH (slope negative and falling)


FieldDescription

BTC/Macro Change: Percentage change of Bitcoin's price vs. the Global Macro Trend (default: 21-bar average)

Macro Trend: Composite assessment combining slope direction and trend momentum. Reads BULLISH when both align upward, BEARISH when both align downward, NEUTRAL when they disagree

Macro Slope: The global macro trend's average slope expressed as a percentage

BTC Valuation: Relative valuation category based on BTC/Macro deviation (Extreme Premium → Extreme Discount)

BTC Price: Current Bitcoin price


How to Use

This indicator is primarily useful for identifying market phases where Bitcoin's price has diverged from the global macro trend.

Identify extremes: Look for periods when the histogram reaches elevated positive or negative levels

Assess valuation: Use the BTC Valuation reading to gauge relative over/undervaluation

Confirm with trend: Check whether macro conditions support or contradict the current price level

Mean reversion: Consider that significant deviations from trend historically tend to revert

Note: This indicator identifies relative valuation based on macro conditions—it does not predict price direction or timing.


Settings
Lookback Period - 21 bars - Number of bars for calculating rolling averages
Macro Slope Scale - 3.0 - Multiplier for macro slope line visibility