‘Parabolic’ Bitcoin Rally Can Come from M2 Money Supply – CryptoNinjas

Key Takeaways:

• M2 money supply growth (delayed until early 2025) might indicate another surge in Bitcoin’s price.
• But experts advise caution, noting that Bitcoin’s price is determined by many economic factors, not just a single one.
• Historically, there has been a strong correlation between increases in global M2 and Bitcoin price appreciation.

As ever in the circus of the cryptocurrency market, where an exciting new force of innovation meets the chaos of speculative volatility, Bitcoin price signals are actively promoted. As it turns out, one of the most tracked indicators is the M2 money supply. Its future trajectory and potential impact on Bitcoin make some analysts both excited and nervous. The crux of the matter: will the M2 money supply really cause a “parabolic” run for the top coin in 2025?

The M2 Money Supply Explained: Breakdown of what it is and its Impact

Before we get into the details of recent data and expert opinions, it is important to understand the fundamental idea of M2 money supply in the context of the broader economy. M2 is a broad measure of a country’s money supply, including cash, checking accounts, savings accounts and other near money that can be quickly converted to cash. In short, it is the plentiful purchasing power in an economy.

The Inflationary Link and Bitcoin as a Store of Value: Fluctuations in the M2 money supply, especially through the quantitative easing (QE) policies adopted by the central banks, are often accompanied by inflationary shocks. As more and more traditional currencies come into circulation, they lose their purchasing power. This depreciation sets the stage for the growth of scarcity; scarcity that makes assets such as Bitcoin with a capped supply much more attractive stores of value. And investors flock to these assets to protect their wealth from the ravages of potential inflation.

Is Bitcoin Looking Good? The Data Will Be Out in January 2025: Recent economic data provides a persuasive argument for a potentially bullish correlation between Bitcoin and the M2 money supply. According to MacroMicro data, as of January 2025, the year-on-year fixed exchange rate for the M2 money supply of the four major central banks stood at a remarkable 3.65%. The rising trajectory indicates an increase in global liquidity, an important factor that has reflected positively on Bitcoin’s price movement in the past. Such liquidity ramping can lead to more investment in risk assets such as…