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Breaking News: REX Shares Claims Its DOGE And XRP Spot ETFs Will Be Approved By US SEC Tomorrow
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Breaking News: REX Shares Claims Its DOGE And XRP Spot ETFs Will Be Approved By US SEC Tomorrow

Global M2 Tightens Grip On Bitcoin—What’s Next?

Jake Simmons
Jake Simmons
6 months ago
3 mins read
Bitcoin price news

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Bitcoin’s tight correlation with global M2 has returned to the spotlight, suggesting that broader monetary conditions remain a key force behind the cryptocurrency’s market trajectory. Recent price action shows Bitcoin converging with M2’s downward drift—mirroring roughly a 70-day lag. This cyclical movement highlights Bitcoin’s ongoing responsiveness to fluctuations in liquidity, even as other fundamental factors, like the newly announced US Strategic Bitcoin Reserve (SBR), continue to capture headlines.

Global M2 Correlation And Bitcoin Market Inefficiency

In his latest research note, analyst Joe Consorti underscores that “Bitcoin’s directional correlation with global M2 has tightened again,” indicating that price remains heavily swayed by money supply trends. After a few months of divergence—fueled in part by a strong US dollar—Bitcoin fell to $78,000, coming within $8,000 of M2’s projected path.

The global M2 index has softened, partly reflecting the dollar’s robust performance. Despite that drag, Bitcoin appears to be following the general liquidity blueprint it has tracked throughout this cycle, suggesting Bitcoin’s price still hinges on major macro forces like central bank expansions and contractions. “While this relationship isn’t a direct cause-and-effect mechanism, it continues to provide a useful macro framework,” Consorti writes.

Bitcoin vs M2
Bitcoin vs M2 | Source: X @JoeConsorti

He added: “The takeaway? Bitcoin remains the ultimate monetary asset in a world where money supply, balance sheet capacity, and credit are perpetually expanding. As global money supply expands, bitcoin tends to follow it, at least directionally. But this cycle is seeing additional variables that make M2 a less reliable standalone indicator, such as the US dollar being historically strong, creating a drag on global M2 denominated in USD, and more accurate measures of money supply and liquidity coming onto the scene.”

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Although macro conditions are exerting familiar pressure, the market’s reaction to the SBR announcement has been perplexing. After the US President Donald Trump formally declared plans to accumulate Bitcoin through a “budget-neutral” mechanism, the price tumbled 8.5% in just under a week. Consorti described the sell-off as “an irrational reaction highlighting major inefficiencies in pricing Bitcoin’s geopolitical importance.”

Executive Order 14233 mandates Treasury and Commerce officials to grow America’s BTC holdings—currently at 198,109 BTC—without new taxpayer cost or congressional oversight. This is a stark contrast to previous government-level adoptions, such as El Salvador’s legal tender move, which coincided with a surge in Bitcoin’s price. Consorti attributes the disparity to short-term profit taking and a “sell-the-news” mentality, adding that “the magnitude of the selloff indicates a complete failure to price in the long-term implications.”

Despite the SBR-related dip, Bitcoin’s technical signals suggest a possible local bottom forming. The cryptocurrency dipped to $77,000 before bouncing back, filling a low-volume gap in the $76,000–$86,000 range. Buyers seized on the retracement, creating two hammer candlesticks on the weekly chart.

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Hammer candlesticks typically point to a reversal, especially when they appear at cycle-defining support levels. According to Consorti, “Historical precedent suggests that Bitcoin forms these patterns at cycle turning points… The last time we saw this exact price structure was during the tail end of Bitcoin’s summer 2024 consolidation, two months before it surged from $57,000 to $108,000.”

A notable trend amid these price fluctuations is Bitcoin’s rising dominance, even during periods of market contraction. ETH/BTC recently sank to 0.0227—its lowest since May 2020—indicating intensifying skepticism toward altcoins. Meanwhile, institutional demand for Ethereum has likewise slumped, as evidenced by a 56.8% drop in the asset under management (AUM) ratio for Ethereum vs. Bitcoin.

“This cycle belongs to Bitcoin, and all future cycles will only further cement this reality,” Consorti asserts. He suggests altcoins are fighting an uphill battle as Bitcoin-centric narratives gain global traction.

At press time, BTC traded at $82,875.

Bitcoin price
BTC remains below key resistance, 1-day chart | Source: BTCUSDT on TradingView.com
Featured image created with DALL.E, chart from TradingView.com
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Jake Simmons
Jake Simmons

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.

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His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.

Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control.

For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.

As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.

In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.

You can engage with his latest takes on Twitter: @realJakeSimmons.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

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