The relationship between Bitcoin and global money supply has become one of the most hotly debated topics. As we move through 2025, Bitcoin is getting stronger while global money printing increases.
In this article:
- we'll take a closer look at Lyn Alden's research on the topic,
- evaluate the hot 12-week lead idea,
- use AI and public data to make a 12-month Bitcoin price prediction.
Understanding the M2 Connection
M2 money supply measures the total amount of money available in the economy. It includes cash, checking accounts, savings accounts, and other readily accessible funds. When aggregating M2 from the eight largest economies (US, China, Europe, UK, Japan, Canada, Russia, and Australia), we get a comprehensive view of global money supply.
To understand why M2 matters, let's put it in the context of other monetary aggregates:
M0
The most basic form of money (monetary base). Just physical cash in circulation and money banks keep at the central bank. The foundation that central banks control directly.
M1
M0 plus checking accounts and other highly liquid deposits that can be quickly converted to cash. This measures money people use for daily spending and transactions.
M2
M1 plus savings accounts, money market accounts, and small time deposits. This better reflects the total money available for spending and investment in the economy.
As you go from M0 to M2, you get a bigger and bigger picture of available money. M2 shows the most complete view of money in the system.
When looking at Bitcoin's connection to money policy, M2 matters because it shows all the money that could potentially flow into investments like Bitcoin. Global M2 is measured in U.S. dollars, which tells us both how strong the dollar is and how fast money is being created worldwide.
The core thesis is simple:
When more money gets printed (M2 grows), Bitcoin tends to go up as investors look for alternatives to traditional investments. When money printing slows down or stops, Bitcoin tends to underperform.
The Quantitative Evidence
Bitcoin as the Superior Liquidity Barometer
A recent study by Lyn Alden and Sam Callahan looked at data from May 2013 to July 2024. They found that indeed Bitcoin reacts strongly to changes in global money supply.
Here's what the numbers show:
Overall Connection: Bitcoin has a 0.94 correlation with global money supply over the entire period. That's incredibly strong! (1.0 would mean perfect correlation)
The shorter-term connections are weaker because Bitcoin is volatile and gets affected by crypto-specific news, but the 12-month average still shows the highest correlation among all asset classes:
| Asset | Correlation with M2 |
|---|---|
| Bitcoin | 0.51 |
| Gold | 0.50 |
| S&P 500 (SPX) | 0.45 |
| Emerging Markets (EEM) | 0.39 |
| Total World Stock (VT) | 0.33 |
| Bonds (BND) | 0.18 |
| Treasury Long Term (TLT) | 0.15 |
12-Week Lead Pattern?
While Lyn Alden's research established the strong correlation and directional alignment between Bitcoin and global M2, what grabbed people's attention was the 12-week lead pattern, shared by Julien Bittel, CFA and Head of Macro Research at Global Macro Investor:
Here it is… the most copied Bitcoin chart on the planet, updated.
— Julien Bittel, CFA (@BittelJulien) June 25, 2025
Nothing unusual going on, but remember: it’s not about matching Global M2 tick for tick…
It’s all about the trend moving higher – and that’s still firmly intact. Bullish. pic.twitter.com/lkdgObGWo3
Sarson Funds' study published in June 2025 identified a 10-week forward lead as optimal, while other analysts report from 8-14 weeks.
So, did we find a Bitcoin crystal ball?
Sina, a Bitcoin researcher, MIT professor, and cofounder of 21stCapital, offers a different opinion:
Everyone is talking about the chart that predicts Bitcoin using global M2 and they are using terrible analytics.
— Sina 🗝️⚡ 21st Capital (@Sina_21st) June 24, 2025
I explain why.
00:00 M2 Astrology
02:15 Measurement Problems
04:08 Illiteracy 1
05:14 Illiteracy 2
07:01 Illiteracy 3
08:15 Illiteracy 4
09:29 What is… pic.twitter.com/AOW4lBj8Fl
I agree with Sina, so let's leave the "astrology" and get back to the Lyn Alden's research, which holds actual statistical relevance.
Bitcoin and global M2 have solid correlation, and importantly the mechanism behind it makes sense, but I don't agree with people who put the two together on a chart and say "look M2 went up, therefore bitcoin's going up over the next few months too."
— Lyn Alden (@LynAldenContact) June 29, 2025
It's not assured like that.
83% Directional Correlation
The most important finding is that, while the 12-month average correlation was lower (0.51) due to high Bitcoin volatility, when it comes to just the direction, Bitcoin moves in the same direction as global money supply more often than any other asset.
74% of the time over 6-month periods, and a staggering 83% of the time over 12-month periods, beating all other major investments in consistency.
| Investment | How Often It Follows Money Supply |
|---|---|
| Bitcoin | 83.2% |
| S&P 500 | 81.2% |
| World Stocks | 72.3% |
| Gold | 68.1% |
| Emerging Markets | 59.9% |
| Long-Term Treasury Bonds | 44.8% |
| Regular Bonds | 44.6% |
The main point:
By watching global money supply trends, you can predict Bitcoin's general direction over 12-month periods with 83% accuracy.
Making the Model More Accurate
Moving forward, the Alden study reveals that while money supply strongly influences Bitcoin's price, supply-side factors can sometimes override liquidity conditions.
This adds more precision to the model.
Using MVRV Z-Score
The MVRV Z-Score is a technical indicator that helps determine if Bitcoin is overvalued or undervalued by comparing its current market price to what investors paid on average. When the Z-Score is high, many holders may sell despite growing money supply. When it's low, Bitcoin may be oversold and ready to rise even without money supply growth.
The HODL Wave Pattern
The HODL Waves shows the percentage of Bitcoin held for over a year, revealing:
- Declining waves during bull markets as long-term holders sell
- Rising waves in bear markets as strong hands accumulate
- Cycle peaks typically see significant wave declines
- Cycle bottoms usually show wave increases
Key Exceptions
According to research, Bitcoin's correlation with global liquidity typically breaks during:
- Extreme valuations (2013, 2017, 2021 cycle peaks)
- Major market events (exchange failures, large scams, market crises)
Using both money supply data and internal metrics like MVRV Z-Score provides better insight into potential divergences from liquidity patterns.
Applying the Model
For investors, the M2-Bitcoin correlation offers several insights:
Timing Market Cycles
Monitoring global M2 trends, combined with Federal Reserve rate cut expectations, can help anticipate Bitcoin movements. Lower rates typically increase M2, potentially driving Bitcoin prices as investors seek inflation hedges.
Risk Management
Understanding liquidity cycles can inform position sizing and timing. Periods of M2 contraction might warrant more conservative positioning, while expansion phases could justify increased exposure.
Advanced Strategy
Combining liquidity analysis with supply-side metrics provides superior timing:
| Liquidity | MVRV Z-Score | Investment Signal |
|---|---|---|
| High | Low | Optimal accumulation zone |
| High | High | Caution warranted despite favorable macro |
| Low | High | Highest risk environment |
| Low | Low | Mixed signals - wait for clarity |
Historical Examples
Scenario 1 - Late 2022 (Optimal Buying Opportunity)
- M2 Condition: Global M2 was contracting, but central banks were signaling potential policy shifts
- MVRV Z-Score: Very low (around -1.5), indicating Bitcoin was oversold
- HODL Wave: Rising to 65%+ as long-term holders accumulated
- Strategy Action: Start accumulating despite poor current liquidity, because low MVRV + rising HODL wave suggested a bottom
- Result: This correctly identified the $15,500 bottom in November 2022
Scenario 2 - Late 2021 (Warning Signs)
- M2 Condition: High liquidity environment with Fed still printing money
- MVRV Z-Score: Very high (above 7), indicating extreme overvaluation
- HODL Wave: Declining rapidly as long-term holders distributed to newcomers
- Strategy Action: Take profits despite favorable liquidity conditions
- Result: This would have helped avoid the crash from $69,000 to $15,500
Now, treat the following as an entertainment part. Let's let AI use the findings to predict the Bitcoin price direction for the coming 12 months.
Playbook α
Playbook is a premium section with actionable tactics and strategies directly applicable to your portfolio.
In this playbook:
- Predicting Bitcoin price movement with AI based on the M2 correlation model
The Bottom Line
From a practical perspective, here's what matters:
-
Watch Global M2: Bitcoin has historically followed global money supply trends with 83% directional consistency over 12-month periods. This doesn't give precise timing, but helps identify the overall macro environment - rising M2 often signals potential Bitcoin strength over longer timeframes.
- Check Internal Metrics: Use MVRV Z-score and HODL waves to identify when Bitcoin might decouple from liquidity trends:
- High Z-score = Be careful, even with good liquidity
- Low Z-score + High liquidity = Potential buying opportunity
- Consider the Context: Bitcoin's relationship with liquidity may evolve as the asset matures, institutional adoption grows, and new fundamental drivers emerge.
The M2-Bitcoin correlation isn't perfect, but it provides a useful framework for understanding Bitcoin's macro environment when combined with on-chain metrics and traditional market analysis.