Bitcoin’s price has recently strayed from its usual relationship with the global M2 money supply (the total amount of money in circulation). This has some people worried that the bull market might be ending. But is there really cause for concern?
Bitcoin’s Price and the M2: A Temporary Disconnect?
Analyst Colin pointed out this price deviation on X (formerly Twitter). He emphasized that while the Bitcoin price and the M2 money supply generally move together, short-term deviations are normal. He compared the current situation to a similar dip seen in February 2025, arguing that it doesn’t mean the relationship between Bitcoin and the M2 is broken. Instead, he suggested that some investors are focusing too much on the short term and overlooking the bigger picture. He even stated that this kind of disconnect happens about 20% of the time.
Colin clarified that the M2 isn’t a perfect predictor of Bitcoin’s exact price. It’s more about indicating the overall market direction. He claims the M2 is “directionally predictive” for Bitcoin, with around 80% accuracy. The key takeaway is that they don’t share the same scale; Bitcoin’s price and the M2 are measured differently. He also suggested that a decoupling might happen near the peak of the current market cycle. Despite this, his analysis suggests we’re not there yet, and the bull run isn’t over.
Don’t Panic: The Bigger Picture
Market expert Raoul Pal also weighed in, suggesting that the correlation between Bitcoin’s price and the money supply actually supports a positive outlook. He argues that if global liquidity explains 89% of Bitcoin’s price movements, then current events like the Israel-Iran conflict are relatively insignificant in the long run. It’s all just noise.
Trading firm QCP Capital agrees, noting that Bitcoin hasn’t shown any signs of widespread panic selling, demonstrating its growing maturity as an asset. They believe continued institutional buying (companies like Strategy and Metaplanet are buying the dip) and positive flows into Bitcoin ETFs are supporting the price.
At the time of writing, Bitcoin was trading around $104,700, slightly down for the day. But based on the analysis above, this might just be a temporary blip.
