Bitcoin, Is M2 All You Need to See?...Experts: "All a Misconception"

▲ Bitcoin (BTC) Investment

An analysis has emerged suggesting that the market's conventional wisdom—that the M2 indicator, representing global liquidity, directly explains the price of Bitcoin (BTC)—is inconsistent with actual data, thereby raising the necessity for a re-examination of how macroeconomic indicators are interpreted.

According to Bitcoinist, a cryptocurrency specialized media outlet, on April 24 (local time), some analysts pointed out that the correlation between Bitcoin and the global M2 money supply is either exaggerated or misunderstood. They explained that while the two indicators often move in the same direction, time lags and discrepancies repeatedly occur in reality, making it difficult to consider it a simple causal relationship.

According to the analysis, Bitcoin often exhibited characteristics of a leading asset, moving before global M2. In the 2021 case, even after Bitcoin formed a peak, global M2 continued to increase for several months. This trend suggests that Bitcoin is not merely an asset that reacts to increased liquidity but rather has a structure that front-runs market expectations and sentiment.

Another analysis showed a recurring pattern where Bitcoin's price reacted after a lag of approximately 70 to over 100 days following changes in global M2. This indicates limitations in using M2 as a short-term price prediction indicator.

The market also warns that a simple formula assuming that an increase in M2 directly leads to a rise in Bitcoin could distort investment judgments. While liquidity expansion is an important macroeconomic variable, it is emphasized that actual capital flows operate differently depending on the financial market structure and investor sentiment.

Ultimately, the assessment continues that Bitcoin is an asset influenced by global liquidity, but at the same time, it has a complex market structure with characteristics that lead or move independently.

*Disclaimer: This article is for investment reference only and does not take responsibility for investment losses based on it. The content should be interpreted for informational purposes only.*