LONDON (IT BOLTWISE) – The relationship between the global money supply and the price of Bitcoin is a fascinating topic for investors. New macroeconomic visualizations suggest Bitcoin could benefit from accelerated M2 expansion. But analysts warn that the current cycle may end by 2025.
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The relationship between the global money supply and the price of Bitcoin is of great interest to many investors. A recent analysis by Alphractal shows that Bitcoin price increases often correlate with an expansion in the global money supply M2. This correlation is illustrated by on-chain macro visualizations that could potentially provide bullish signals for Bitcoin investors.
Alphractal analysts plotted the one-year rate of change in the global money supply M2 directly against the Bitcoin price. This reveals an almost mechanical relationship that has repeated itself over several market cycles. Whenever the M2 money supply grows at an accelerated rate, Bitcoin enters strong expansion phases. These phases are marked in the chart by green zones.
In contrast, periods of declining liquidity, marked in red on the chart, correlate with painful drawdowns in the crypto market. Bitcoin reacts as a highly sensitive seismograph to the availability of fiat capital in the global financial system. This dynamic shows that it is not the static money supply but the flow of liquidity that is crucial for the Bitcoin price.
Current data suggests that Bitcoin could enter a more favorable macro environment provided M2 expansion continues to gain pace. However, money supply growth has lagged behind previous cycles, which explains why recent Bitcoin rallies have been flatter and altcoins have delivered little return so far.
However, liquidity analyst Michael Howell from Cross Border Capital sees the current cycle already at its end. In an interview, he emphasized that, according to his models, this should mark a high at the end of 2025 or beginning of 2026. The current data already showed the beginning of a downward inflection.
For Bitcoin, this means that it remains a strategic hedge against long-term monetary inflation. But the environment may not be ideal for chasing late risk excesses. Investors should therefore act cautiously and closely monitor macroeconomic developments.
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