The Bitcoin Global Liquidity (BGL) Indicator is a powerful tool designed to analyze global liquidity shifts and their potential impact on Bitcoin (BTC) price trends. By tracking changes in money supply across 16 major economies, this indicator helps traders anticipate BTC movements with a default 72-day forward shift—currently the most effective period for the ongoing market cycle.
How the BGL Indicator Works
1. Global Liquidity Calculation
The BGL aggregates the money supply from the following economies, adjusted against their respective USD exchange rates:
- United States (US)
- China (CN)
- Japan (JP)
- European Union (EU)
- South Korea (KR)
- India (IN)
- Canada (CA)
- Australia (AU)
- Taiwan (TW)
- Brazil (BR)
- Switzerland (CH)
- Russia (RU)
- Mexico (MX)
- Thailand (TH)
- Indonesia (ID)
- Singapore (SG)
The total liquidity is divided by 1e12 (trillions) for scalability.
2. Measuring Liquidity Changes
The indicator compares the current global money supply to the supply from N days prior (default: 72 days). The percentage change is plotted to reflect:
- Green: Increasing liquidity (bullish signal for BTC).
- Red: Decreasing liquidity (bearish signal).
3. Predictive Capabilities
Since Bitcoin is highly sensitive to liquidity shifts, the BGL’s forward projection helps identify trends:
- A 72-day lag suggests BTC price rallies follow liquidity surges.
- Historical data shows BTC price surges correlate with dotted horizontal lines marking liquidity uptrends (e.g., Oct 2022–Nov 2024).
Key Features
✅ Customizable Period: Adjust the forward-shift days in the settings.
✅ Visual Clarity: Color-coded plots (green/red) for liquidity changes.
✅ Open-Source: Transparent script for community verification.
👉 Explore advanced trading tools to leverage liquidity-based strategies.
FAQs
Q1: Why 72 days for the current cycle?
A: Backtesting revealed a 72-day lag between liquidity changes and BTC price movements aligns best with current market behavior. This period may vary in future cycles.
Q2: How accurate is the BGL Indicator?
A: While not infallible, it has shown strong correlation with BTC uptrends. Traders should combine it with other technical indicators for confirmation.
Q3: Which currencies impact the calculation most?
A: The USD, CNY, JPY, and EUR dominate due to their large economies, but all 16 currencies contribute to the aggregate liquidity.
Q4: Can I use this for assets other than Bitcoin?
A: Yes! The BGL can be applied to any liquidity-sensitive asset, though BTC is the default focus.
Limitations
- Data Delays: FX adjustments and central bank reporting lags may affect real-time accuracy.
- Regional Gaps: Excluded economies (e.g., Africa) could influence global liquidity marginally.
Conclusion
The BGL Indicator offers a unique lens to forecast Bitcoin’s price action by tracking macro liquidity trends. By understanding the 72-day liquidity-price lag, traders can better time entries during liquidity-driven rallies.
👉 Stay ahead with institutional-grade analytics to refine your BTC trading strategy.
Note: Always cross-verify signals with fundamental analysis and risk management.