Bitcoin is a macro liquidity indicator rather than merely a cryptocurrency, or at least that is the narrative we have been seeing around the industry. Bitcoin indicates changes in global liquidity and, consequently, the outlook for risk-on assets serves the great purpose of being an important indicator for investors from both the traditional finance and cryptocurrency worlds.
Why canary?
In traditional mining, canaries were used to detect toxic gases before humans could. Liquidity comes before price. There is a definite pattern in history: Bitcoin reacts one to three weeks later, when liquidity starts to increase. This was demonstrated in February 2024, when an increase in liquidity preceded a two-week rally of +35% in Bitcoin, and again in November 2024, when a three-week surge of +40% in Bitcoin followed a flash higher in liquidity.
Crucially, network growth serves as a confirmation signal, so liquidity is not the only factor that counts. The move continues when both are in alignment.
Liquidity is 55 and growing, according to the most recent data, while network growth is 74. This combination is essential: network growth guarantees that fuel continues to flow, while liquidity starts the engine. When taken together, they show that Bitcoin is bottoming out rather than collapsing, setting the stage for the subsequent high.
Following a summer correction, Bitcoin is consolidating at about $116,500. With traders concentrating on daily swings, short-term volatility has obscured the larger picture. With Bitcoin holding comfortably above its 200-day EMA and consolidating above clustered support at $113,000–$114,000, the technical structure is still bullish. When viewed in a larger context, the indicators suggest resilience rather than weakness.
Why this is important
The canary in the coal mine for all risky assets is Bitcoin. It frequently sets the example for commodities, altcoins and equity markets when liquidity conditions change. A wider recovery phase across risk assets may soon begin if Bitcoin is bottoming as liquidity improves.
The fundamentals are obvious, so ignore the noise caused by transient fluctuations. Bitcoin’s network expansion and increasing liquidity are indicating that the worst may be over. There is still hope, and the market is getting ready for its next upward move.