Bitcoin surged to $104,000 on May 8, reigniting interest in a long-debated market indicator: the 90-day lagged global M2 money supply chart. As macroeconomic signals and digital asset performance continue to intertwine, traders are revisiting historical correlations to make sense of Bitcoin’s latest price breakout. While not a perfect predictor, the lagged M2 model has once again entered the spotlight—prompting renewed discussion about the role of liquidity in shaping cryptocurrency valuations.
This resurgence in attention underscores a broader trend: investors are increasingly looking beyond technical analysis and turning to macro-financial metrics to anticipate Bitcoin’s next move. But how strong is the link between money supply growth and crypto prices? And what other forces are driving this rally?
Understanding the 90-Day Lagged M2 Model
M2 refers to a broad measure of the global money supply, including cash, checking deposits, savings accounts, and other near-money assets. When analysts apply a 90-day lag to this data and overlay it with Bitcoin’s price chart, a notable correlation emerges—particularly during previous bull cycles.
The theory suggests that increases in global liquidity take about three months to flow into risk assets like Bitcoin. This delayed transmission reflects the time it takes for newly created money to move through financial systems, reach investors, and eventually find its way into alternative investments.
In early 2025, global M2 began rising again in February—marking the start of a new expansionary phase. When shifted forward by 90 days, this uptick aligns closely with Bitcoin’s recent surge past $100,000. For many traders, this alignment reinforces the idea that macro liquidity remains a foundational driver of crypto market momentum.
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Historical Alignment vs. Recent Divergence
While the visual correlation between lagged M2 and Bitcoin’s price has captured attention, performance data reveals a more complex picture.
Over the past year, Bitcoin has appreciated by approximately 75%, significantly outpacing the 7.37% rise in the lagged M2 metric. Even in 2025 alone, Bitcoin is up around 8% year-to-date, despite a slight 0.16% dip in the lagged money supply during the same period.
This divergence highlights an important nuance: while macro liquidity may set the stage for broader market conditions, it doesn’t solely determine price action. Bitcoin’s growing adoption, institutional inflows, and evolving investor sentiment are amplifying its returns beyond what traditional monetary models might predict.
Institutional Demand Fuels Momentum
One of the most significant catalysts behind Bitcoin’s 2025 rally has been sustained institutional demand—particularly through spot Bitcoin exchange-traded funds (ETFs).
Over the past three weeks, Bitcoin ETFs have attracted $1.8 billion in net inflows. A single-day record of $422 million was recently recorded, led by BlackRock’s IBIT fund. These flows indicate growing confidence among traditional finance players and suggest that structural demand is now a key component of Bitcoin’s price support.
Such institutional participation introduces a new layer of market dynamics—one that isn’t fully captured by macroeconomic indicators like M2 alone. The ease of access provided by ETFs has lowered barriers for pension funds, family offices, and retail investors alike, creating a broader and more resilient investor base.
Expert Perspectives: Is the M2 Signal Still Valid?
Julien Bittel, Head of Macro Research at Global Macro Investor, remains confident in the signal’s relevance.
“The lagged M2 chart still tells the same story: We’re going higher.”
Bittel argues that while short-term deviations occur, the long-term trend continues to reflect expanding global liquidity conditions. He notes that central banks’ accommodative policies—including rate cuts and balance sheet reinvestments—have laid the groundwork for continued asset price appreciation across equities, real estate, and digital assets.
Still, he cautions against treating the model as a standalone trading tool.
Limitations of the M2 Correlation
Despite its popularity in trading circles, relying solely on the lagged M2 chart comes with risks.
Analysts point out that correlation values between Bitcoin and lagged M2 have fluctuated over time—strong during certain bull runs but weak or even negative during periods of regulatory stress or market panic. External factors such as geopolitical tensions, regulatory announcements, or technological shifts can disrupt any apparent relationship.
Moreover, the global M2 aggregate masks regional disparities. For example, while U.S. money supply trends may influence Wall Street-linked crypto flows, they may not fully reflect capital movements in Asia or emerging markets where peer-to-peer trading dominates.
CryptoSlate has previously noted that the M2-Bitcoin link is best understood as a reflection of global liquidity trends rather than a precise price forecasting mechanism. It offers context—not certainty.
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Frequently Asked Questions (FAQ)
Q: What is the 90-day lagged M2 theory?
A: It’s a hypothesis suggesting that changes in the global M2 money supply precede movements in Bitcoin’s price by about 90 days. As new money enters the financial system, it gradually flows into risk assets like Bitcoin.
Q: Does M2 growth always lead to higher Bitcoin prices?
A: Not necessarily. While there’s historical alignment during bull markets, other factors—like regulation, adoption, and investor sentiment—can override or accelerate price action independently of money supply trends.
Q: Why did Bitcoin rise when lagged M2 fell slightly in early 2025?
A: Short-term discrepancies are common. Institutional ETF inflows, geopolitical hedging demand, and market speculation can drive prices even in periods of flat or declining liquidity indicators.
Q: How reliable is the M2 chart for predicting future prices?
A: It should be used as one piece of a broader analytical framework. While useful for identifying macro-level trends, it lacks precision for timing entries or exits.
Q: Are there alternative metrics that better predict Bitcoin’s price?
A: Yes. On-chain metrics (like NUPL or MVRV), hash rate trends, exchange reserves, and realized volatility often provide more timely signals than macro aggregates like M2.
Q: Can retail investors use the M2 model effectively?
A: With caution. Retail traders should combine it with technical analysis and sentiment indicators rather than relying on it exclusively.
Beyond M2: The Evolving Drivers of Bitcoin Valuation
While monetary expansion remains influential, Bitcoin’s maturation as an asset class means its price is now shaped by a more diverse set of forces:
- Regulatory clarity in major economies
- Adoption by financial institutions via ETFs and custody solutions
- Technological upgrades, including Layer-2 scaling and smart contract integrations
- Geopolitical demand for censorship-resistant stores of value
These developments suggest that Bitcoin is transitioning from a speculative asset tied primarily to liquidity cycles into a strategic holding with real-world utility and institutional backing.
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Final Thoughts
The resurgence of the lagged M2 narrative reflects a deeper truth: macroeconomic forces still play a vital role in shaping cryptocurrency markets. However, as Bitcoin continues to evolve, so too must our analytical frameworks.
Rather than viewing M2 as a crystal ball, investors should treat it as a contextual compass—one that helps identify favorable macro winds but doesn’t replace due diligence or diversified analysis.
With institutional adoption accelerating and global liquidity trends turning positive, the environment remains supportive for digital assets. Whether Bitcoin sustains its climb above $104,000 will depend not just on money supply growth—but on how effectively it captures value across multiple dimensions: technological, financial, and geopolitical.
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