Crypto analyst Lark Davis reports that global M2 money supply has reached a record $113 trillion, with U.S. M2 at an all-time high of $21.94 trillion, signaling unprecedented liquidity fueling risk-on assets like Bitcoin (BTC). Trading at $114,258, just 2.3% below its peak, BTC is primed for a breakout, potentially hitting $150,000-$170,000 by year-end, per analysts like Crypto Auris and Anthony Pompliano. A Blockware chart shows a 0.94 correlation between global M2 growth and BTC price over two years, with historical lags of 1-6 months, as seen in the April 2025 surge above $100,000.
The S&P 500’s climb above 6,200 and a 10.8% drop in the U.S. Dollar Index (DXY) in H1 2025 amplify BTC’s appeal as a hedge against fiat debasement. Posts on X highlight a 12-week lag correlation (R²=0.86) between M2 and BTC, with recent ETF inflows ($1.8B in three weeks, led by BlackRock’s IBIT) driving momentum. However, a 180-day Pearson correlation of 0.65 shows short-term volatility, and a 0.16% dip in 90-day lagged M2 suggests BTC’s 8% YTD gain outpaces liquidity trends, raising bubble concerns.
Bitcoin’s rally aligns with U.S. pro-crypto policies, like the GENIUS Act and Trump’s ventures, contrasting Hungary’s rejection of BTC reserves. China’s $44 trillion M2, growing 9% YoY, and global rate cuts further boost liquidity, though geopolitical risks (e.g., China-Taiwan tensions) could trigger volatility. Although Bitcoin’s sensitivity to liquidity (0.51 over a 12-month period) indicates a bullish prognosis despite a neutral MVRV Z-score, significant M2 acceleration is essential for long-term benefits.
With the support of Trump’s cryptocurrency advisor Bo Hines, Mike Johnson, French Hill, and GT Thompson are spearheading this initiative to increase investor confidence and draw in institutional funding. Treasury Secretary Scott Bessent predicts the stablecoin market could hit $3.7 trillion by 2030, up from $261.5 billion, with USDC (valued at $44.2 billion) and USDT poised to benefit from compliance clarity. However, Democrats, led by Senators Elizabeth Warren and Jeff Merkley, criticize the GENIUS Act for weak consumer protections and failure to curb Trump’s $620 million crypto profits, raising ethical concerns.
While BTC thrives in high-liquidity environments, its 75% 12-month gain versus 3.8% M2 growth suggests speculative froth. Analysts warn of corrections if macro shocks hit, though ETF demand and a weakening dollar bolster the $170,000 target. Hungary’s conservative stance may temper European adoption, but U.S. regulatory clarity could offset this, making BTC a focal point for investors.
