Expanding Global M2 Money Supply Could Spark a Bitcoin Rally, But Caution Remains

Expanding Global M2 Money Supply Could Spark a Bitcoin Rally, But Caution Remains

The increasing global M2 money supply may be setting the stage for a significant Bitcoin surge, yet analysts urge caution before making any bold investment moves.

“This isn’t a market where you should wager your entire portfolio on a short-term correction,” said Pav Hundal, lead analyst at Australian crypto exchange Swyftx, in a statement to Cointelegraph. “However, our central scenario still points to a strong March and beyond.”

“It’s Not All Doom and Gloom”

“In typical market conditions, global liquidity expansion serves as a fairly reliable leading indicator for crypto,” Hundal explained. “Current data indicates that spot buyers are active, and with the U.S. raising its debt ceiling by $4 trillion, liquidity is certainly in play.”

He emphasized that despite recent market turbulence, the overall outlook remains optimistic. According to data from MacroMicro, the year-over-year fixed exchange rate for the M2 money supply of the four major central banks stood at 3.65% as of January.

Historically, analysts have observed a strong correlation between rising global M2 money supply and Bitcoin price increases. This trend is largely attributed to enhanced liquidity and lower interest rates fostering greater risk appetite among investors. Economist Lyn Alden noted in a September research report that Bitcoin moves in alignment with global M2 supply 83% of the time.

US Money Supply Surge Could Ignite a Bitcoin Breakout

Crypto analyst bitcoindata21 highlighted the potential impact of a weakening U.S. dollar on Bitcoin’s trajectory in a February 25 post on X, stating, “With weakness in the dollar causing a net positive effect on Global M2, it’s only a matter of time before Bitcoin reacts.”

Similarly, crypto commentator Colin Talks Crypto echoed this sentiment, suggesting that the expanding global M2 supply signals an impending major move for Bitcoin.

Investment research firm Bravo Research added to the bullish narrative, pointing out in a February 25 post that the U.S. money supply has doubled over the past decade. “This surge in liquidity could fuel Bitcoin’s parabolic run-up,” they noted.

However, despite these optimistic projections, Bitcoin saw a brief dip below $90,000 on February 25—the first time since November. The drop followed U.S. President Donald Trump’s confirmation that his proposed 25% tariffs on Canada and Mexico would proceed as scheduled, after a temporary 30-day pause earlier this month.

While macroeconomic factors continue to shape Bitcoin’s trajectory, many analysts remain confident that increasing global liquidity will ultimately serve as a tailwind for the world’s largest cryptocurrency.