Bitcoin’s price doesn’t always move in sync with the global money supply, a recent analysis reveals. This has some crypto experts rethinking how Bitcoin behaves in relation to broader economic trends.
Bitcoin Peaked Before the Money Supply
A crypto analyst, Rekt Capital, noticed something interesting: Bitcoin hit its all-time high in November 2021. However, the global M2 money supply (a measure of the total money in circulation) kept climbing for another five months, peaking in April 2022. This five-month gap is making people question how much Bitcoin’s price is actually tied to the overall money supply.
It’s Not a Simple Relationship
Rekt Capital’s analysis doesn’t say Bitcoin’s price directly depends on the money supply. Instead, it suggests Bitcoin might be a bit of a “predictor.” It might react to changes in monetary policy and investor sentiment before those changes fully show up in traditional financial indicators like the M2 money supply. Even though the money supply kept growing after Bitcoin’s peak, Bitcoin had already started to fall.
Predicting Bitcoin’s Future?
Another analyst, Crypto Con, looked at the relationship between Bitcoin’s price and the M2 money supply differently. They found a pattern: when the M2 money supply goes up, Bitcoin tends to rally about ten weeks later. And when the M2 money supply goes down, Bitcoin tends to fall about ten weeks later.
This pattern held true across several market cycles. For example, a drop in M2 in April 2023 was followed by a Bitcoin price drop, and an increase in M2 around March 2024 coincided with a Bitcoin rally.
What Does This Mean for the Future?
Based on this ten-week lag pattern, and the current upward trend in the M2 money supply, Crypto Con suggests Bitcoin could see further price increases until early September 2025. However, it’s important to remember that these are just observations, and past performance is not a guarantee of future results. There are many factors that influence Bitcoin’s price.