The relationship between Bitcoin and global monetary supply—particularly M2—has long intrigued analysts, investors, and economists. While many forecasts blend technical indicators, adoption trends, and macroeconomic sentiment, this analysis takes a different path: a pure M2-only model. By isolating the impact of global and U.S. M2 money supply growth, we aim to project Bitcoin’s price trajectory for the 2025–2026 market cycle with minimal external influence.
This approach allows us to test a powerful hypothesis: Can liquidity alone—measured by year-over-year (YoY) M2 expansions—accurately forecast Bitcoin’s bull market peak and subsequent correction?
Understanding the Bitcoin-M2 Relationship
Historically, Bitcoin has shown a strong directional correlation with global liquidity conditions. During periods of aggressive monetary expansion—such as the 2020–2021 pandemic-era quantitative easing—Bitcoin surged from around $10,000 to nearly $69,000. Conversely, tightening cycles coincided with bear markets.
Key insights from historical data:
- Directional Alignment: Bitcoin moves in tandem with global M2 expansions about 83% of the time on an annual basis.
- Lag Effect: BTC typically responds to M2 changes with a 2–6 month delay, though recent cycles suggest this lag may be compressing.
- Correlation Strength: As of late 2024 to early 2025, the correlation coefficient (r) between YoY M2 growth and BTC price is ~0.60–0.65, matching levels seen during the last major bull run.
👉 Discover how global liquidity shifts could unlock the next Bitcoin surge.
M2 Trends: U.S. and Global Projections (2024–2026)
To forecast Bitcoin’s price, we begin by analyzing expected M2 movements.
U.S. M2 Money Supply
- December 2024: $21.63 trillion, up +3.87% YoY
Slightly below the April 2022 peak of $21.72 trillion, but showing signs of renewed expansion. - End of 2025 Projection: ~$22 trillion (+1.7% YoY)
Reflects mild monetary easing—potentially through targeted rate cuts or "QE-lite" measures. - Into 2026: Expected to stabilize or slightly contract to ~$21.8 trillion
Indicates a shift toward tighter policy if inflation remains under control.
Global M2 Money Supply
From 2023 to Late 2025: Projected rise from $107 trillion to $127 trillion (+18% total, or +5–8% YoY)
- Some quarters may see growth接近 +10%, driven by emerging markets.
- Eurozone and Japan remain cautious; China may expand more aggressively until mid-2025.
Into 2026: Expected to plateau near $127T in early/mid-2025**, then decline to **~$118T by end of 2026 (~–7%)
- This contraction signals a risk-off environment, historically bearish for high-beta assets like Bitcoin.
The M2-to-Bitcoin Price Model: A Historical Rule of Thumb
Based on past cycles, we can derive a simplified but effective predictive framework:
For every +1 percentage point in YoY M2 growth above the baseline (~+2–3%), Bitcoin gains approximately +15–25% from its starting price—assuming sustained correlation (r ≥ 0.60).
Let’s apply this to recent and projected data.
2020–2021 Bull Run: Benchmark Case
- Peak YoY M2 expansion: +20–25%
- Bitcoin starting price: ~$9,500
- Final price: ~$69,000 (~7x gain)
- Excess M2 growth above baseline: ~+18–22 pts
- Implied BTC return per excess point: ~+30% per point (higher due to mania effect)
Late 2024–Early 2025: Current Cycle
- YoY M2 expansion: +5–8%
- Excess above baseline: +3–6 percentage points
- Projected BTC gain: +45% to +150% (midpoint: ~+97.5%)
- Starting price: ~$55,000 (late 2024 average)
- Implied early 2025 price: ~$108,600
This aligns closely with observed prices—Bitcoin reaching ~$100,000 in early 2025, confirming the model’s predictive power even in moderate liquidity environments.
Forecasting the 2025–2026 Bitcoin Cycle
Using only M2 dynamics, here’s our projection:
Bull Market Peak (Mid to Late 2025)
- Global M2 peaks around $127T in mid-2025
- BTC price response lags by 3–6 months
- Final peak expected in Q4 2025 or Q1 2026
- Projected range: $135,000 – $165,000
Why higher than early 2025 levels?
Even though initial rallies reflect current liquidity, the cumulative effect of sustained M2 growth often fuels a final “blow-off” top after official expansions flatten.
👉 See how real-time macro trends are shaping the next leg of Bitcoin’s rally.
Correction Phase (Late 2026)
- Global M2 contracts to ~$118T by end of 2026 (–7% from peak)
- Negative YoY growth signals macro tightening
- Historical precedent: BTC corrections of –40% to –70% during such phases
- Projected BTC price by end of 2026: $65,000 – $95,000
Note: This doesn’t imply long-term bearishness—only cyclical correction aligned with liquidity withdrawal.
Why Is the Lag Shortening?
Traditionally, Bitcoin lagged M2 changes by 6+ months. Now, evidence suggests a compression to as little as 70 days (~2–3 months).
Possible reasons:
- Front-Running by Traders: Market participants anticipate Fed policy shifts earlier, especially with improved transparency and data availability.
- Institutional Adoption: ETFs and corporate treasuries react faster to macro signals than retail investors did in prior cycles.
- Increased Market Efficiency: With more data-driven players, arbitrage opportunities close quickly.
Despite this, we maintain a 3–6 month window for major cycle peaks, as final tops often occur after liquidity growth peaks, not when it begins.
Frequently Asked Questions (FAQ)
Q: Can M2 alone really predict Bitcoin’s price?
A: While no single variable guarantees accuracy, M2 has demonstrated strong explanatory power over Bitcoin’s cyclical trends. It doesn’t capture short-term volatility or black swan events but provides a reliable macro roadmap.
Q: What if central banks restart aggressive QE?
A: That would significantly alter projections. A return to +15%+ YoY M2 growth could push Bitcoin well beyond $175,000—potentially triggering another mania phase similar to 2021.
Q: Does this model account for halving events?
A: No. This is an M2-only forecast. The 2024 halving is acknowledged as a structural support factor but excluded here to isolate liquidity effects.
Q: How reliable is the +15–25% per M2 point rule?
A: It’s a historical average derived from multiple cycles. Accuracy improves when correlation (r) exceeds 0.6 and during clear bull markets. Deviations occur during regulatory shocks or geopolitical crises.
Q: Could tariffs or trade wars affect this forecast?
A: Yes—but they’re excluded intentionally. Policies like proposed tariffs introduce uncertainty in timing and impact. Their inclusion would require scenario modeling beyond a pure M2 framework.
Q: Is Bitcoin still sensitive to U.S. M2, or is global liquidity more important?
A: Both matter, but global M2 has become increasingly dominant due to cross-border capital flows and non-U.S. adoption growth. However, U.S. policy still sets the tone for global financial conditions.
Final Outlook
Bitcoin’s 2025–2026 cycle appears firmly rooted in liquidity dynamics:
- A projected rise in global M2 through mid-2025 supports a peak BTC price between $135,000 and $165,000.
- A subsequent contraction into late 2026 implies a cyclical correction down to $65,000–$95,000.
- The model’s strength lies in its simplicity and historical consistency—not perfection, but probabilistic guidance.
As we move through 2025, tracking real-time YoY M2 data will be critical for validating or adjusting these expectations.
👉 Stay ahead of the next market shift with tools that track macro signals in real time.