Recently, it has become common to see charts correlating the growth of global M2 liquidity and the BTC rate. The take is as follows: Global M2 is on the rise, and Bitcoin will soon follow suit, but with a 2-3 month lag. At first glance, it sounds logical — there is more money, so some of it will flow into crypto.
But in reality, things are not that simple. The figures for M2 are collected thread by thread: in the States, they come out once a week, while almost everywhere else in the world — only once a month, and even then with delays. It turns out that 'global' M2 is a skewed and incomplete picture.
Plus, most of these fluctuations are not an increase in the money supply but simply a banal decline of the dollar. When the USD weakens, the amount of M2 in dollar terms increases — but this is purely a visual effect, not a real increase in money.
Almost half of the world's M2 is represented by China. And it is currently printing money, trying to revive its economy. So, 'global growth' is mainly China, not the whole world.
The chart looks impressive but draws a false connection and instills expectations that may face bitter reality. It does not explain why Bitcoin is rising; it merely creates a graphical fit for a beautiful narrative. 🔮
