Bitcoin and M2 Money Supply Correlation: Predicted Rise to $130,000
The recent correction in Bitcoin’s price has reignited discussions about its correlation with the M2 Money supply. Analysts, including Raoul Pal and Abra CEO Bill Barhydt, suggest that rising M2 money supply could significantly influence Bitcoin (BTC) prices. As the global money supply increases, risk-on assets like Bitcoin are seen as potential beneficiaries. The reasoning is straightforward: with more money being printed, the value of fiat currency diminishes, making Bitcoin—a growing store of value—more attractive.
Predictions for Bitcoin’s Future
According to Abra’s Bill Barhydt, the prevailing trend indicates a possible dip in Bitcoin’s price before a major upswing. He predicts that while Bitcoin might face short-term bearish sentiment, it could rise to $100,000 shortly before reaching an unprecedented high of $130,000 by August or September. His insights are grounded in various factors, including growing institutional adoption, as seen with the recent purchase of 4,020 BTC, which reinforces Bitcoin’s scarcity. Barhydt argues that irrespective of Bitcoin’s immediate price movements, it remains positioned as a significant liquidity asset in the market.
Historical Context of Bitcoin Prices
Despite an 8% price drop that temporarily brought Bitcoin down to approximately $103,000, the cryptocurrency is still following its historical trends. Historically, May has been a bullish month for Bitcoin, with an average increase of about 19%. Current data from Cryptorank shows that Bitcoin has already experienced a 10% uptick this month, illustrating resilience amidst volatility. Even after the recent selloff, Bitcoin’s long-term holders are largely unfazed, emphasizing the cryptocurrency’s potential for recovery.
M2 Money Supply and Economic Trends
Aligning Bitcoin’s trajectory with the M2 money supply trajectory is essential for understanding its price movements. With global M2 reaching record highs of over $111 trillion by mid-2025, economic conditions including dovish monetary policies due to recession fears could further enhance Bitcoin’s appeal. Historically, as M2 rises, Bitcoin has tended to respond positively, albeit with a slight lag. This correlation suggests that Bitcoin may rebound from its recent slump as liquidity in the economy continues to expand.
Evolving Perception of Bitcoin
The ongoing acceptance of Bitcoin goes beyond its role as a speculative asset. There is a noticeable shift among corporations and government entities toward recognizing Bitcoin as a strategic reserve asset. Some U.S. states are actively passing legislation to adopt Bitcoin as such, reflecting a changing perception in both private and public sectors. Senator Cynthia Lummis has indicated Congress will prioritize further discussions on Bitcoin reserve bills, showing a concerted effort to enhance Bitcoin’s status in the financial ecosystem.
Challenges and Corporate Attitudes
While Bitcoin is gaining traction among certain corporations, not all businesses are embracing it wholeheartedly. Companies like Meta and Microsoft have opted against adopting Bitcoin as a reserve asset, reflecting skepticism in some quarters. However, as more organizations, including GameStop, integrate Bitcoin into their financial strategies, the landscape is evolving. This mixed response highlights the ongoing debate about Bitcoin’s utility and value proposition as a safeguard against inflation and currency devaluation.
In summary, the interplay between Bitcoin and the M2 money supply could be pivotal in shaping the cryptocurrency’s price trajectory. With predictions leaning toward a significant rise, the factors influencing this growth—from institutional investments to legislative support—are crucial to monitor. While challenges remain, Bitcoin’s potential as a hedge against fiat devaluation continues to attract interest, positioning it as a noteworthy asset in contemporary financial discourse.
