📊 Bitcoin vs. M2: Historical Correlation Analysis
🔹 2010–2019 (Gradual M2 Growth)
M2: Slow, steady growth.
Bitcoin: Early-stage adoption → volatile but upward trend.
Correlation: Loose but developing. BTC reacted more to tech adoption and market cycles than monetary policy.
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🔹 2020–2021 (M2 Surge During COVID Stimulus)
M2: Exploded from ~$15T to over $21T in just 18 months.
Bitcoin: Rose from ~$5K to $69K (ATH in Nov 2021).
Correlation: Very strong. Bitcoin acted as a hedge against fiat debasement and inflation expectations.
📌 This period cemented Bitcoin's "digital gold" narrative.
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🔹 2022–2023 (M2 Contraction & Tightening)
M2: Slight decline — rare in U.S. history.
Bitcoin: Fell from $69K to ~$15.5K by Nov 2022.
Correlation: Clear again. Liquidity shrinkage reduced speculation and risk appetite.
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🔹 2024–2025 (M2 Begins Rising Again)
M2: Recent uptick (as shown in your chart).
Bitcoin: Recovered sharply, reaching above $70K before correcting.
Correlation: BTC tends to rise with liquidity return, especially when markets expect future easing.
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📈 Summary Table:
Period M2 Trend Bitcoin Reaction Correlation
2010–2019 Gradual rise Volatile growth Weak–Moderate
2020–2021 Massive surge Explosive rally Strong
2022–2023 Slight decline Deep correction Strong
2024–2025 Rising again Recovery & volatility Moderate–Strong
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📌 Key Takeaways:
Bitcoin thrives in liquidity expansion (rising M2).
Tight monetary policy & M2 contraction = bearish for BTC.
Market perception of future liquidity (not just current M2) is crucial for BTC price action.
