- Global liquidity turned negative again with Bitcoin underperforming major U.S stocks for the past 2 weeks
- Bitcoin outperformed during the tariff drama, but stalled on the charts soon after
Cryptocurrencies and stocks across the global market could be set for a hit after the drop in flow of capital into the markets.
Recent data from central banks revealed a sharp drop in total balance sheet assets over the past 30 days, used as a proxy for global liquidity.
Now, while it doesn’t represent all the liquidity available in the markets, it helps to understand the macroeconomic environment that can either support or restrict capital flows into risk assets like Bitcoin [BTC].
What does negative global liquidity mean for risk-on assets?
Historically, Bitcoin has rallied when global liquidity increased, like during the 2020–2021 bull run.
However, when this metric turned negative in late 2021 and 2022, Bitcoin struggled to maintain any upward momentum on the charts.
The ongoing decline, with the same once again dipping below zero, could be a sign of fading risk appetite. This typically reflects stricter monetary policies or tapering fiscal support.
This would also mean that demand for Bitcoin and other risk-on assets like S&P 500 may fall.
Source: Alphractal
The latest drop was similar to those in the past when risk assets slowed down or suffered setbacks. In fact, the fall in liquidity meant there was a watchful mood among investors.
Many investors usually cut back on crypto assets if markets are volatile. If things remain liquidity-wise, upward pressure could weaken.
Will Bitcoin reclaim S&P 500 correlation?
Still on that note, over the past two weeks, the BTCUSD/SPX chart showed that Bitcoin had weaker gains than stocks, which was different from its normal pattern in the market.
The gap between the past two weeks implied that BTC stopped growing while stocks were oscillating close to their highest levels.
Bitcoin was in high demand during the tariff-driven confusion — “Liberation/Tariff Day” — making solid gains afterwards. Still, it fell below the 18 ratio point.
Unless Bitcoin reclaims that main threshold, the weakness it is now showing may be momentary.
Source: TradingView
Will Bitcoin reclaim macro dominance?
Well, investors appear torn. A muted correlation between BTC and stocks suggests hesitation. Risk appetite has shifted—at least temporarily—towards traditional markets.
Should current macro tensions fall once more, Bitcoin may recover and begin to lead the market as it did after previous shocks.
If risk appetite has shifted towards stocks, BTC might fall even further and fall below a ratio of 17:1, compared to the S&P 500. Mainly if its momentum slips.
The 18-mark continues to be key as resistance and 16 as the main support. Sudden shifts in macroeconomics or significant movements in the stock market could be what triggers BTC’s next move.
