The Bitcoin Layer The Real Link Between M2, Bank Assets & Bitcoin’s $110,000 Strength
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Jul 3, 2025 Dive into the intriguing link between Bitcoin's rise and M2 money supply trends. Explore how banking assets and fiscal stimuli during the pandemic have shaped the demand for Bitcoin. Understand the balance sheet mechanics of treasury issuance and its impact on liquidity. Discover the resilience of Bitcoin amid fiscal changes and what a potential summer rally could mean for the market. This engaging discussion sheds light on financial dynamics that could give investors a strategic edge.
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Bitcoin and M2 Relationship
- Bitcoin's price often tracks M2 money supply increases, but M2 is not the only or best liquidity measure.
- Both the impact of M2 and its limitations can be true simultaneously for Bitcoin demand.
Stimulus Impact on Bitcoin
- The 2020 fiscal stimulus boosted bank deposits and M2, which correlated with Bitcoin's strong price rally.
- The stimulus money created new deposit liabilities that helped fuel increased Bitcoin demand.
Banking Assets in Liquidity Model
- Banking system assets and Treasury holdings must be considered alongside M2 for liquidity analysis.
- Central and commercial banks' asset changes reflect Treasury issuance and impact overall monetary liquidity.