Predicted Bitcoin Surge Linked to Expansion of Global Money Supply, According to Expert Analyst
**"Let's Talk Bitcoin"
The crypto world is buzzing as Bitcoin smashed the $100,000 barrier this week, reaching an explosive $104,000 before cooling off slightly to roughly $103,000. And guess who's celebrating besides the crypto enthusiasts? Yep, that's right - our old pal, global liquidity!
Julien Bittel, an expert at Global Macro Investor, believes that global M2 money supply is a fantastic bellwether for Bitcoin's future price action. Bittel presented a chart showcasing a 12-week lag between an increase in M2 and Bitcoin's price tag. In simpler terms? When M2 makes a move, Bitcoin follows suit around three months later.
From early 2023 to early 2024, global M2 swelled from $98 trillion to slightly over $108 trillion. And then, just like that, Bitcoin breached the six-figure mark, baby! But by mid-2024, M2 took a breather. As a result, so did Bitcoin, sliding below $80,000. Lucky for us, M2's climbing again, surpassing $111 trillion, and Bitcoin just might stick around for the ride through mid-2025.
Bittel said with a grin, "We're gonna go higher!"
Not every expert is convinced, though. Analyst Benjamin Cohen isn't fully sold on the idea that Bitcoin always lags behind liquidity shifts. He pointed out that the crypto veteran reached record highs in 2017 and 2021 before M2 peaked, which doesn't fit the 12-week rule.
But Cohen isn't tossing in the towel just yet. He believes that Bitcoin could actually lead the way, with alterations to M2 happening later. If that's the case, the recent surge might be flashing a warning sign that global liquidity might just be drying up in the coming months.
What happened back in 2022 can't be ignored either. When Bitcoin took a massive plunge, it coincided with M2 hitting rock bottom. However, the plummet persisted after the FTX calamity, highlighting that Bitcoin's price movements don't always stick to a steady schedule.
So what does all this mean? Well, Cohen's skepticism hints that the current rally might be signaling a storm on the horizon, not a pathway to paradise. Luckily, we've got our trusty chart and these wise analysts watching our backs.
Image sourced from Pexels, chart created using TradingView
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The Enrichment Data
In a nutshell: The relationship between the global M2 money supply and Bitcoin's price movements is usually interpreted as global M2 acting as a leading indicator for Bitcoin's price, rather than Bitcoin leading changes in M2.
Key Evidence of M2 as a Leading Indicator of Bitcoin Price
- Technical analyses frequently show that Bitcoin's price tends to follow upwards trends in the global M2 money supply with a delay of about 2 to 3 months (56–90 days) [1][2][5].
- A 78-day offset model indicates a strong predictive correlation between M2 trends and Bitcoin's price action 78 days later [1][4].
- Matt Crosby, from Bitcoin Magazine Pro, points out an 84%+ correlation between Bitcoin price and global M2 liquidity, emphasizing that the monetary expansion needs time—around two months—to permeate the financial system before affecting speculative assets like BTC [2].
- Historical data confirm that liquidity injections into the global economy (measured by M2) influence Bitcoin price with a discernible lag, substantiating that Bitcoin seems to react to macroeconomic liquidity conditions instead of shaping them [2].
On the Contrasting Perspective Where Bitcoin Leads M2
- No strong evidence has been publicly presented backing Benjamin Cohen’s proposition that Bitcoin leads the changes in the global M2 money supply. The dominant narrative in recent analyses and market observations positions M2 liquidity expansion as the driver, while Bitcoin responds subsequently.
- Analyst Julien Bittel points out a 12-week lag between an increase in M2 and Bitcoin's price, suggesting that global M2 acts as a leading indicator for Bitcoin's price.
- Despite Cohen's skepticism about Bitcoin always lagging behind liquidity shifts, Bitcoin's seemingly parallel movements with M2 for many analysts indicate that global M2 might be a leading indicator for Bitcoin's price.
- Tech enthusiasts and analysts argue that the smashing of Bitcoin's $100,000 barrier this week might be a sign that global M2 liquidity is expanding, potentially hinting at further price increases for Bitcoin.
- Recent historical data reveal a discernible lag between liquidity injections in the global economy and Bitcoin's price movements, reinforcing the notion that global M2 could serve as a leading indicator for Bitcoin's price action.