Bitcoin Could be on the verge of reaching a new all time high as the M2 metric which tracks money is at its best. Bitcoin is currently trading at $115,946, dropping 2.19% over the past 24 hours as of this writing.
The M2 Money Supply metric involves cash, bank deposits, and also easily accessible assets. The increase means more money is flowing through the economy, which is a good thing for riskier investments like Bitcoin.
The correlation between Bitcoin and global M2 has grown stronger over time. Every major Bitcoin rally since 2020 has closely followed a spike in M2–shows that chart.
The current global M2 figure stands at $109.14 trillion, a record high. Meanwhile, Bitcoin appears to be following the liquidity curve upward. Even after steep pullbacks, BTC has often found support along this rising trendline.
According to historical data from the Federal Reserve, the U.S. money supply expanded steadily from the 1960s to the early 2000s. The biggest surge came during the 2020 COVID-19 pandemic. In just a year, M2 jumped from $15 trillion to over $21 trillion due to stimulus checks and monetary easing.
In 2022, M2 experienced a slight decline as the Fed increased interest rates and reduced spending. This downturn also happened as Bitcoin went down. However, with liquidity on the rise once more, the environment seems good for Bitcoin to follow suit.
Besides, more dollars in the system often drive capital into hard assets. Bitcoin is set to benefit as global M2 continues climbing. Hence, if history repeats, Bitcoin could soon follow a similar path as the liquidity spike and resume its upward momentum.