Bitcoin's remarkable rally in 2025, surpassing the $100,000 milestone, continues to draw attention as traders analyze its correlation with the global M2 money supply (lagged by 90 days). This narrative, while debated, offers insights into Bitcoin’s price movements amid shifting macroeconomic liquidity cycles.
Key Takeaways
- Bitcoin’s price trajectory often mirrors lagged M2 liquidity trends, suggesting a delayed reaction to global money supply changes.
- The 90-day lagged M2 chart resurfaced as BTC crossed $104,000, reigniting discussions among analysts.
- Institutional inflows (e.g., Bitcoin ETFs) and macroeconomic factors (weaker USD, risk-on sentiment) further bolster BTC’s momentum.
- While the M2 correlation is compelling, it’s not infallible—external catalysts and market noise limit its predictive precision.
The M2-Bitcoin Correlation Explained
How Global M2 Influences Bitcoin
- Lag Effect: Adjusting M2 data by 90 days has historically hinted at Bitcoin’s turning points, as liquidity filters into markets.
- Macro Validation: Julien Bittel of Global Macro Investor noted the chart’s persistence, signaling continued upside potential.
- Elastic Relationship: The correlation is stronger over multi-month windows but volatile in shorter periods (30-day correlations range from -0.9 to +0.95).
👉 Why liquidity cycles matter for crypto
Beyond M2: Additional Price Drivers
Institutional Demand
- Spot Bitcoin ETFs recorded $1.8B inflows** in 3 weeks, with BlackRock’s IBIT leading at **$58B AUM.
- Single-day net inflows peaked at $422M on May 7, 2025.
Macroeconomic Tailwinds
- USD index down 4% since February 2025, pushing capital toward alternative assets.
- Stablecoin issuance and off-chain credit aren’t captured by M2 but impact crypto liquidity.
Limitations of the M2 Model
Discrepancies in Performance
- 2025 YTD: Bitcoin +8% vs. lagged M2 -0.16% (despite global M2 growing 3.25%).
- 12-month view: BTC +75% vs. M2 +3.8%, highlighting periods of decoupling.
Analyst Caution
While the M2 chart serves as a sentiment anchor, traders emphasize:
- Noise from geopolitical/regulatory events.
- Liquidity persistence as the true test—will central banks sustain M2 growth?
FAQ
Q: How reliable is the 90-day M2 lag for predicting Bitcoin’s price?
A: It’s a broad indicator but lacks precision due to market volatility and external factors.
Q: Why did Bitcoin outperform M2 in 2025?
A: Institutional adoption and ETF demand created independent momentum beyond liquidity cycles.
Q: Should traders rely solely on M2 metrics?
A: No—combine with technical analysis, on-chain data, and macroeconomic trends.
👉 Explore Bitcoin’s macro drivers
Conclusion
Bitcoin’s breach of $100K underscores its role as a liquidity barometer, yet its path remains influenced by both M2 trends and structural shifts in crypto markets. While the lagged M2 model provides a framework, adaptability to new catalysts—ETFs, regulatory clarity, institutional participation—will define BTC’s next phase.
For now, the chart watches continue.