Blockware Intelligence Newsletter: Week 163
Bitcoin on-chain analysis, mining analysis, macro analysis; overview of 1/25/25 - 1/31/25
The following breakdown of net liquidity, the relationship between different components of the fiat system, and its resulting impact on Bitcoin is, in my opinion, one of the most comprehensive, signal-packed analysis ever published in this newsletter. I have provided a sneak peek below, but the full write-up is available only to premium newsletter subscribers.
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Net Liquidity x BTC
Jack Mallers always says, "The Bitcoin price is a function of adoption + fiat debasement." I think 2025 could be a year where we see these two factors collide in a big way.
In a generalized sense, the 2017 bull run was primarily adoption-driven. 2021 was primarily liquidity driven. 2023 & 2024 were primarily adoption driven. And 2025 has the potential to be both adoption and liquidity driven.
Allow me to breakdown liquidity for you:
Orange line: Bitcoin Price
Purple Line: US M2
White Line: "Net Liquidity” (Fed Balance Sheet - Treasury General Account - Overnight Reverse Repo)
When new dollars are created (purple line goes up), those dollars have to end up somewhere. Remember, every buyer there's always a seller. Even if there's a "rush into assets", someone is selling those assets for dollars -- so where do those dollars go? "Net liquidity" is a good way to relatively track the movement of dollars based on the 3 main places they can end up:
> With the Fed (+)
> With the Treasury (-)
> In Overnight Deposits (-)
When the "total assets" of the Fed is rising, that means they are buying treasuries, spending dollars into the "system" (i.e. investors are getting dollars with which they can use to purchase other assets). Positive for liquidity.
