The global money supply has seen a massive surge of $4.5 trillion this year, which is three times larger than Bitcoin’s market capitalization. This increase in liquidity is measured by the M2 benchmark, which includes various liquid financial instruments such as physical currency and checking accounts. Historically, Bitcoin has shown a close correlation with M2 growth, as the demand for decentralized assets like BTC tends to rise when global liquidity expands.
One of the key differences between Bitcoin and traditional fiat currencies is the fixed supply of 21 million coins for Bitcoin. This scarcity makes Bitcoin resistant to inflationary pressures, making it an attractive choice for institutional players and individuals looking for a safe haven in times of economic uncertainty or inflation. Earlier this year, Bitcoin reached its all-time high, surpassing $109,000, driven in part by concerns over currency debasement, central bank policies, and the search for alternative stores of value.
However, the price of Bitcoin has since pulled back, currently trading around $84,000, due to escalating global trade tensions and renewed tariff disputes. Despite this short-term volatility, the growing disparity between traditional monetary expansion and Bitcoin’s fixed supply could strengthen its role as a hedge against fiat currencies in a world inundated with liquidity. André Dragosch, the Head of Research at Bitwise, first shared this data on April 16 in a post on X.
In conclusion, the significant increase in global money supply this year has far exceeded Bitcoin’s market cap, highlighting the growing importance of decentralized assets in a world grappling with economic uncertainty and volatile currency markets. Bitcoin’s fixed supply and resistance to inflationary pressures make it an appealing choice for investors seeking a safe haven in times of crisis. While Bitcoin’s price may experience short-term fluctuations, its unique properties as a scarce digital asset could further solidify its role as a hedge against traditional fiat currencies.
