Bitcoin Part 3: The Number That Predicts Bitcoin 83% of the Time

After Part 2, my son thought he’d won.

He’d shown me the MVRV chart. Thirteen years of data. Every top, every bottom, called in advance. I’d gone quiet. He’d grinned.

“So you’re buying now?”

“Not yet.”

The grin faded. “Mom. What else do you need?”

Here’s the thing. MVRV tells me where Bitcoin is relative to itself. That’s useful. But Bitcoin doesn’t trade in a vacuum. It trades in a world where the Fed prints money, tightens money, and moves markets with a single press conference.

“What happens to MVRV when the Fed breaks something?”

He didn’t have an answer.

So I went looking for someone who did.

The Analyst Who Changed My Mind

Lyn Alden isn’t a crypto bro. She’s not on Twitter with laser eyes. She spent years analyzing fiscal deficits, interest rates, and central bank policy before she ever touched Bitcoin.

When she finally wrote about it, she didn’t talk about halvings or adoption curves.

She said something that stopped me cold:

Bitcoin is the world’s purest liquidity barometer.

Not a technology story. Not an adoption story. A monetary phenomenon.

I read that three times.

The 83% Number

Alden’s research found something I couldn’t ignore:

Bitcoin moves in the direction of global liquidity 83% of the time over any 12-month period.

83%.

That’s not correlation. That’s a seatbelt.

Higher than stocks. Higher than gold. Higher than bonds. Higher than real estate.

Nothing else comes close.

I showed my son. He shrugged. “So it follows the money printer. Everyone knows that.”

“No. Everyone says that. She actually proved it.”

What Global Liquidity Means

Let me translate this out of Fed-speak.

Global M2 is the total amount of money sloshing around the world’s major economies - cash, checking accounts, savings, anything liquid. Alden tracks it across eight countries: US, China, Eurozone, UK, Japan, Canada, Russia, Australia.

When central banks print, M2 goes up. When they tighten, M2 goes down.

Here’s the insight: Bitcoin has no earnings to anchor its price. No cash flows. No dividends. It’s pure supply and demand.

Fixed supply. Variable demand. And demand follows liquidity.

When there’s more money in the system, some of it finds Bitcoin. When money gets sucked out, Bitcoin bleeds.

It’s not complicated. It’s just math.

The Historical Proof

2020: COVID hits. Fed panics. Biggest liquidity injection in history. Bitcoin goes from $7,000 to $64,000 in twelve months.

2022: Fed pivots. Quantitative tightening begins. Money supply contracts. Bitcoin falls from $47,000 to $16,000.

2023-2024: M2 stabilizes. Slowly starts expanding. Bitcoin recovers to new all-time highs above $100,000.

Every. Single. Time.

My son was watching over my shoulder. “Okay, that’s actually interesting.”

“It gets better.”

December 1, 2025

The Fed officially ended quantitative tightening on December 1st.

That was two days ago.

For three years, the Fed was actively draining liquidity from the system. That headwind is gone now. By Alden’s framework, the medium-term bias just shifted bullish.

“So MVRV says mid-cycle,” my son said slowly. “And liquidity says... tailwind.”

“They’re agreeing. For now.”

“What happens when they don’t?”

The Conflict

This is where it gets interesting.

Alden doesn’t use liquidity alone. She explicitly says: check MVRV first.

Even in a pro-liquidity environment, if Bitcoin is extremely overvalued internally - if everyone’s already sitting on massive gains and getting greedy - profit-taking can overwhelm the macro tailwind.

2021 was exactly this. Liquidity was still positive. But MVRV was screaming. The internal pressure won. Bitcoin crashed 77%.

So you need both signals aligned.

Right now: MVRV 1.21 (neutral) and liquidity tailwind just turned green.

They’re agreeing. That’s rare. It won’t last.

The Limitations (Because I’m Not a Cheerleader)

My son knows I can’t leave anything alone.

“What’s wrong with this one?”

Three things:

17% of the time it fails. Strong correlation isn’t causation. Exchange collapses, regulatory shocks, black swans - they can override macro conditions.

The data is lagged. M2 numbers come out weeks or months late. Bitcoin trades 24/7. You’re driving with a rearview mirror.

It doesn’t tell you magnitude. Knowing Bitcoin will probably go up doesn’t tell you if it’s 10% or 100%.

But 83% over 12-month periods? That’s better odds than almost anything else I’ve analyzed in 35 years.

The Synthesis

I finally saw how this all fits together.

Fidelity tells you the destination. Where could Bitcoin theoretically go? What’s the ceiling if it takes X% of gold’s job?

MVRV tells you the position. Where are we in the cycle? Early, mid, late? Is everyone greedy or terrified?

Alden tells you the environment. What’s the wind doing? Is the Fed helping or hurting? Is liquidity expanding or contracting?

Three lenses. Three different questions. One complete picture.

My son looked at me. “So what’s your answer now?”

“I think I need to build a framework that combines all three.”

He laughed. “Of course you do.”

Part 4: The Phaetrix Framework

I took Fidelity’s destination. ARK’s positioning. Alden’s macro lens.

I built a decision matrix. Green lights, yellow lights, red lights.

Part 4: The exact 3-color decision matrix I use instead of hope. Green = accumulate. Yellow = hold. Red = get out. I’ll show every cell.

Subscribe so you don’t miss it.

Framework adapted from Lyn Alden’s research and Sam Callahan’s liquidity analysis.

This is for informational purposes only and should not be considered investment advice. I am not a financial advisor. Always do your own research before making any investment decisions.

2025/11/21