Bitcoin, is M2 all you need to look at?...Experts: "Completely mistaken"

▲ Bitcoin (BTC) Investment

An analysis suggests that the market misconception that the M2 indicator, which represents global liquidity, directly explains Bitcoin (Bitcoin, BTC) prices, is inconsistent with actual data, raising the need to re-examine how macroeconomic indicators are interpreted.

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

According to the analysis, Bitcoin often exhibited characteristics of a leading asset, moving ahead of global M2. In the 2021 case, even after Bitcoin formed its 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 has a structure that preemptively reflects market expectations and sentiment.

Another analysis repeatedly showed a pattern where Bitcoin prices reacted with a lag of approximately 70 to over 100 days after changes in global M2. This demonstrates the limitations of using M2 as a short-term price prediction indicator.

Warnings have also emerged in the market that the simplistic formula of M2 increase directly leading to Bitcoin's rise could distort investment judgments. While liquidity expansion is an important macroeconomic variable, it was 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 possesses a complex market structure with characteristics that allow it to lead or move independently.

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