The expansion of the M2 money supply generally leads to increased liquidity in the market. As more money circulates, it must find a home, and some of it inevitably flows into speculative assets like Bitcoin. In previous cycles, when the money supply increased, Bitcoin tended to benefit from the added liquidity, which often drove up its price—especially during periods of strong demand.
In short, a larger M2 supply means more money is available for assets like Bitcoin, potentially pushing its price higher.
The Global M2 Money Supply and Bitcoin: A Closer Look
Lately, I’ve come across comparisons of the global money supply and Bitcoin's price movements, often accompanied by charts showing a clear correlation. The conclusion drawn is that when global M2 supply rises, Bitcoin’s price follows after a brief lag. But is this conclusion accurate? Let’s take a deeper dive into the matter.
Global M2 Supply and Bitcoin in the Current Cycle
In this cycle, the global M2 supply is steadily increasing to new highs. After each dip, Bitcoin has mirrored this with a corresponding drop. Currently, Bitcoin seems to lag behind the global M2 supply by approximately 80 days. The question is: is Bitcoin ready to follow the M2 supply increase and reach new highs? If you look at the current cycle, the answer would be yes, indeed. However, when examining past cycles, this conclusion becomes more uncertain. Let’s explore why.
Global M2 Supply and Bitcoin in Previous Cycles (2017/2018 and 2020/2021)
In 2018, the global M2 supply continued to rise even after Bitcoin reached its peak. This could be a warning sign for this cycle. While many are forecasting higher Bitcoin prices due to the rise in the global M2 supply, it’s important to note that this doesn’t always translate into higher asset prices.
In the 2021 cycle, the global M2 money supply continued to rise until early 2022. However, Bitcoin had already reached its cycle top and was entering the early stages of a bear market. This highlights a key point: the increase in M2 supply doesn’t always guarantee further price increases in Bitcoin.
Conclusion
While the global M2 supply is rising this cycle, and Bitcoin has mirrored that growth, there are reasons to be cautious. The global M2 supply has reached new highs, but we must be careful not to assume that this will automatically lead to new highs for Bitcoin. In the past two cycles, the bear market had already begun while the M2 supply continued to rise. Therefore, it's important not to get stuck on the idea that Bitcoin’s price must rise simply because the global M2 supply is increasing.
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In short, a larger M2 supply means more money is available for assets like Bitcoin, potentially pushing its price higher.
The Global M2 Money Supply and Bitcoin: A Closer Look
Lately, I’ve come across comparisons of the global money supply and Bitcoin's price movements, often accompanied by charts showing a clear correlation. The conclusion drawn is that when global M2 supply rises, Bitcoin’s price follows after a brief lag. But is this conclusion accurate? Let’s take a deeper dive into the matter.
Global M2 Supply and Bitcoin in the Current Cycle
In this cycle, the global M2 supply is steadily increasing to new highs. After each dip, Bitcoin has mirrored this with a corresponding drop. Currently, Bitcoin seems to lag behind the global M2 supply by approximately 80 days. The question is: is Bitcoin ready to follow the M2 supply increase and reach new highs? If you look at the current cycle, the answer would be yes, indeed. However, when examining past cycles, this conclusion becomes more uncertain. Let’s explore why.
Global M2 Supply and Bitcoin in Previous Cycles (2017/2018 and 2020/2021)
In 2018, the global M2 supply continued to rise even after Bitcoin reached its peak. This could be a warning sign for this cycle. While many are forecasting higher Bitcoin prices due to the rise in the global M2 supply, it’s important to note that this doesn’t always translate into higher asset prices.
In the 2021 cycle, the global M2 money supply continued to rise until early 2022. However, Bitcoin had already reached its cycle top and was entering the early stages of a bear market. This highlights a key point: the increase in M2 supply doesn’t always guarantee further price increases in Bitcoin.
Conclusion
While the global M2 supply is rising this cycle, and Bitcoin has mirrored that growth, there are reasons to be cautious. The global M2 supply has reached new highs, but we must be careful not to assume that this will automatically lead to new highs for Bitcoin. In the past two cycles, the bear market had already begun while the M2 supply continued to rise. Therefore, it's important not to get stuck on the idea that Bitcoin’s price must rise simply because the global M2 supply is increasing.
Thanks for your support.
- Make sure to follow me so you don't miss out on the next analysis!
- Drop a like and leave a comment!
Lets chat in the comment section. See you there :)
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.