The money supply M2 has reached a record level of $21.86 trillion, which has sparked optimism among investors that Bitcoin (BTC) may soon reflect this upward trend.
This jump comes amid increasing pressure on the economy, particularly due to rising national debt, increased government spending, and growing inflation concerns that threaten financial stability.
How the record money supply M2 of $21.86 trillion may impact Bitcoin
For context, the money supply M2 measures the total amount of money circulating in the economy. It includes M1 (cash and demand deposits), savings accounts, time deposits, and mutual funds.
According to recent data from Barchart, this metric reached a historical high of $21.86 trillion. The recent jump aligns with broader economic challenges in the U.S. An anonymous analyst named Tech Lead recently shared his thoughts on X (formerly Twitter). He emphasized that the U.S. debt-to-GDP ratio has reached historically high levels.
Net interest payments now account for 20% of federal revenues, creating significant pressure on the budget. Additionally, the analyst noted that government spending continues to exceed revenues.
«The money supply M2 is rising to historical highs. The printing press is on,» he added.
However, experts are becoming increasingly optimistic about Bitcoin's prospects in light of this data. Their opinion is supported by historical trends showing a strong correlation between the growth of M2 and the price of Bitcoin.
«On average, the global money supply M2 typically leads the price of BTC by about 12 weeks. Recently, M2 reached a new historical high of $21.86 trillion. This strongly suggests that BTC may follow suit in the coming months,» stated Weiss Crypto.
Tech Lead analyst confirmed this sentiment.
«There are many mixed signals, but the only one that really matters is liquidity. Follow the money,» he said.
But why is Bitcoin rising along with M2? Well, when M2 expands, it can devalue fiat currencies, prompting investors to turn to Bitcoin as a store of value. Greater liquidity in the market also encourages speculation.
Moreover, lower interest rates make traditional investments less attractive, increasing demand for Bitcoin and driving up its price.
«When you monitor the global money supply M2, you understand that everything else is just noise,» wrote investor James Wynn.
In addition to these factors, mathematician and analyst Fred Kruger highlighted BTC's potential in these market conditions. He noted that since 2000, the global money supply and U.S. debt have been growing at a steady rate of 8%.
However, the analyst emphasized that Bitcoin stands out as an asset that not only preserves its value but also grows at significantly faster rates, making it an attractive alternative.
«Essentially, we have a ‘leaky bucket’ that loses 8% of its value per year. Stocks nearly offset this. Not after taxes. Real estate does not offset this at all. Bitcoin does not leak and grows at 40% per year,» wrote Kruger.
These factors paint a bullish picture for the largest cryptocurrency, which faced a correction after reaching a historic high of $111,917 on May 22. Data from BeInCrypto showed that BTC has decreased by 2.9% over the past week. At the time of publication, it was trading at $104,529, representing a decrease of 0.8% over the last day.#BinanceSquare #Write2Earn #Binance #MyCOSTrade #trading $BTC
