The global money supply continues to rise to historic highs, which is typically a bullish signal for the Bitcoin market. However, analysts are divided on whether the record global M2 money supply will drive Bitcoin prices higher, sparking intense discussions in the market regarding cryptocurrency trends.
According to cryptocurrency analyst Lark Davis, citing an official article from Global Market Investors, the US M2 money supply grew by 4.5% year-on-year in May, reaching a record $21.94 trillion. Following this trend, the US M2 money supply is expected to exceed $22 trillion in July. If this growth rate continues, it could double within ten years.
Meanwhile, according to MacroMicro data, the total money supply of the world's four major central banks - the Federal Reserve (Fed), European Central Bank (ECB), Bank of Japan (BOJ), and People's Bank of China (PBOC) - has reached a record $93.7 trillion, with an annual growth rate of 7.45%.
Bullish camp: Global easing boosts demand for Bitcoin allocation
Analysts bullish on Bitcoin believe that the ongoing expansion of global central bank balance sheets is injecting potential momentum into the cryptocurrency market.
Crypto KOL Lark Davis found through quantitative analysis that Bitcoin's price trend shows significant synchrony with the 100-day moving average of the M2 money supply, predicting that the market may start accelerating upward in a few months, with a target price of $250,000.
Lark Davis's viewpoint is supported by Crypto Auris, whose analysis is based on the historic high of global M2 liquidity and estimates that with the expansion of the global money supply, Bitcoin's mid-term reasonable valuation is approximately $170,000.
The core argument supporting this camp is that when central banks like the Federal Reserve maintain loose policies, the excess funds accumulated in the financial system will gradually spill over into alternative assets like Bitcoin. In particular, the US M2 money supply has expanded by 37% since March 2020, and this unprecedented monetary expansion is reshaping the asset allocation landscape.
Additionally, in the context of traditional anti-inflation assets like gold underperforming, Bitcoin is gradually becoming a new choice for institutional investors to hedge against inflation due to its fixed supply.
Bearish camp: Policy uncertainty disrupts the market
Meanwhile, in the current market landscape, the undercurrents of geopolitical tensions are becoming an undeniable disruptive force. A notable example is the recent tariff threats from the Trump administration to multiple Asian countries, which acted like a stone thrown into a calm lake, quickly triggering a widespread correction in the cryptocurrency market.
This phenomenon clearly indicates that even with the rising prominence of digital assets today, traditional financial policies and the geopolitical games behind them can still exert significant pressure on the crypto market in the short term, even temporarily suppressing its trends.
The volatility triggered by external policy uncertainty precisely indicates that Bitcoin's price is constrained by multiple complex factors. Therefore, the market generally believes that the fluctuations in Bitcoin's price are not solely driven by money supply, but are deeply influenced by multiple variables such as policy, geopolitical situations, and macroeconomic expectations.
The applicability boundary of the M2 money supply theory in the cryptocurrency market
This debate essentially tests the applicability of traditional money supply theory in the realm of digital assets. Supporters emphasize Bitcoin's narrative value as an 'anti-inflation asset', while opponents stress that the cryptocurrency market is influenced by unique structural factors (such as institutional adoption pace, regulatory changes, etc.).
It is particularly noteworthy that if there is a turning point in Trump's tariff policy, it may present a new opportunity to test these two theoretical viewpoints. At that time, whether Bitcoin can attract more capital inflow, thereby validating its potential as a 'safe-haven' asset, will be more clearly confirmed.
Conclusion:
Overall, the debate on whether this record money supply can bring a sustained bull market for Bitcoin is still ongoing. Whether it is the bulls' expectations of a 'global easing' driving a revolution in asset allocation or the bears' vigilance over complex factors like policy uncertainty, it all reveals the uniqueness of Bitcoin's price.
Therefore, the future direction of Bitcoin may not be determined by a single factor, but rather the complex interplay of multiple forces such as money supply, geopolitical issues, regulatory environment, and institutional behavior. The market's answer will gradually be revealed over time and through the evolution of events.
