Bitcoin surged past the $100,000 milestone this week, peaking at $104,000 before stabilizing around $103,000. The rally followed news of U.S.-China trade talks in Switzerland, reigniting market optimism. However, analysts highlight a deeper narrative: global liquidity trends are driving Bitcoin's trajectory.
Global M2 Money Supply Hits $111 Trillion
Julien Bittel, a macro researcher at Global Macro Investor, identifies global M2 money supply as a key predictor of Bitcoin's price movements. His analysis reveals a 12-week lag between M2 growth and BTC price appreciation—when M2 rises, Bitcoin typically follows three months later.
"We’re going higher…"
— Julien Bittel (@BittelJulien) May 9, 2025
From early 2023 to early 2024, global M2 expanded from $98 trillion to $108 trillion, coinciding with Bitcoin’s climb above $100,000. A mid-2024 M2 plateau saw BTC dip below $80,000, which Bittel termed a consolidation phase. With M2 now at $111 trillion and rising, Bitcoin could continue its ascent into mid-2025.
Alternative Perspectives: Does Bitcoin Lead Liquidity?
Analyst Benjamin Cohen challenges Bittel’s lag theory, noting Bitcoin peaked before M2 in 2017 and 2021. He suggests BTC may lead liquidity shifts, implying its current rally could signal future M2 declines:
"What if #Bitcoin leads liquidity, rather than lags it?"
— Benjamin Cowen (@intocryptoverse) May 8, 2025
Cohen also cites the 2022 crash, where Bitcoin’s drop aligned with M2 bottoming but prolonged due to the FTX collapse. Such events disrupt the M2-BTC correlation, complicating predictions.
Key Takeaways
- M2 Growth as a Catalyst: Rising global liquidity ($111T M2) historically precedes Bitcoin rallies.
- Divergent Views: Some analysts argue BTC may anticipate liquidity changes rather than follow them.
- External Shocks: Events like exchange failures (e.g., FTX) can decouple Bitcoin from macroeconomic trends.
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FAQ Section
Q: How does M2 money supply affect Bitcoin?
A: M2 growth often correlates with BTC price increases after a 12-week lag, per Julien Bittel’s research.
Q: Can Bitcoin’s price predict M2 movements?
A: Benjamin Cohen suggests BTC may lead liquidity shifts, though this theory remains debated.
Q: What disrupted the M2-Bitcoin relationship in 2022?
A: The FTX collapse extended Bitcoin’s downtrend despite M2 recovery, highlighting external risks.
Featured image from Pexels; chart from TradingView
Disclaimer: This content is for informational purposes only. Past performance does not guarantee future results.
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