M2 Money Supply and the Bitcoin Price: What the Link Really Shows

Short answer: The M2 money supply is the money households and businesses can spend quickly: cash, account balances and short-term deposits. There is a link between M2 and the bitcoin price: when M2 grows strongly, bitcoin usually rises; when M2 shrinks, it often falls. But M2 explains only a small part of the price. Since 2012, the bitcoin price has risen more than 2’000 times as much as the money supply.

On X or YouTube you see a chart where the M2 money supply and the bitcoin price run almost on top of each other, often with the note: "Bitcoin follows liquidity with a ten-week lag." That then becomes a price forecast. Using real data from the US, the euro area and Switzerland, this article shows what there is to this link, where it breaks down and what it means for you as a long-term holder.

What is the M2 money supply?

The money supply is the money households and companies hold outside the banks. Central banks divide it into tiers, depending on how quickly you can get at the money:

Not all central banks draw the lines the same way. In the US, M2 also includes retail money market funds. In Switzerland, M2 consists of M1 and savings deposits; time deposits only come in M3.

When bitcoin charts talk about "the money supply", they almost always mean US M2. It is published monthly by the US Federal Reserve, goes back to 1959 and is in dollars, the currency in which bitcoin is traded worldwide.

How new money is created

Most of M2 isn't cash but balances in bank accounts. It is created mainly when banks make loans: the loan amount is credited to the account, and so there is more money. Central banks steer this through the policy rate and by buying bonds. Why this system rests on a constantly growing money supply is covered in the pillar article Inflation and loss of purchasing power.

The M2 money supply today: US, euro area and Switzerland

Sources: Fed (FRED M2SL), ECB (BSI), SNB data portal. US and euro area from January 1999, Switzerland from December 1999.

That's an average of about 6.2% a year in the US, 5.3% in the euro area and 3.9% in Switzerland. For comparison: the amount of bitcoin is currently growing by about 0.8% a year, by about 0.4% after the 2028 halving, and stops at 21 million.

M2 money supply and the bitcoin price year by year

The following table compares the growth of the M2 money supply with the bitcoin price, each from December to December.

Sources: FRED M2SL, ECB BSI, bitcoin closing prices from bitcoin-powerlaw.com's daily data.

Three things stand out:

1. In the extreme years it fits. In 2020, central banks printed more money than ever before during the Covid crisis, and bitcoin quadrupled. In 2022, the Fed pulled back the money supply, and bitcoin fell 64%.
2. The size never fits. In 2017 the money supply grew a normal 4.9%, and bitcoin rose more than 1’300%. Bitcoin's big jumps have nothing to do with the money supply.
3. The exceptions are no small matter. In 2023 the money supply kept shrinking, and bitcoin rose 156%. In 2026 it is growing almost 5%, and bitcoin is clearly down. In 9 of 13 full years bitcoin moved in the same direction as the US money supply; in 4 it didn't.

How close is the link really?

The popular charts lay the two curves on top of each other, and they look almost identical. There's a simple reason: both rise over the years. Two things that both grow over time always look related on a chart, even if one barely affects the other.

Do the maths and that's exactly what shows:

Own calculation from FRED M2SL and bitcoin-powerlaw.com's bitcoin daily data, as of September 2026.

The high 0.93 comes only from both curves rising. As soon as you ask whether more money supply growth also brings more bitcoin growth, little remains. A three-month lag doesn't make the link with US data any closer either.

What the well-known study says

The most-cited study is by Sam Callahan for Lyn Alden (September 2024). It uses the "global money supply", that is, M2 of the major economies converted into dollars, from May 2013 to July 2024. Result: over 12-month periods, bitcoin moved in the same direction as the global money supply 83% of the time. The correlation of the curves was 0.94, over rolling 12 months 0.51 on average and over 6 months 0.36.

That fits the figures above: the direction is often right, and the shorter the period, the weaker the link. Part of the global curve is also the dollar exchange rate. When the dollar falls, the global money supply measured in dollars rises, and so usually does the bitcoin price in dollars. Both can have the same cause.

Why the money supply still helps bitcoin

A weak short-term link doesn't mean the money supply doesn't matter. In the long run it works in two ways:

1. More money looks for scarce assets. When central banks create money and keep rates low, it moves into shares, property, gold and bitcoin. The 2020/21 phase showed that clearly. When money becomes scarce and expensive, as in 2022, investors first sell what swings the most, and that's bitcoin. Why heavily indebted governments need low rates in the long run is shown in the article Government debt and bitcoin.

2. A growing money supply is why people buy bitcoin. Anyone who sees that the euro money supply has quadrupled since 1999 looks for money that nobody can multiply. That is a slow effect over decades, not a signal for the next few weeks. What makes good money and how scarce euros, francs, gold and bitcoin are is shown in the comparison What is good money?

So far, though, the main driver of the bitcoin price has been adoption: more people, companies, funds and governments hold bitcoin. Alongside that, the money supply is a tailwind, not an engine.

What the money supply means for your savings

For you, a different calculation matters more than any price forecast: what share of all money do you own? When the money supply grows, your share gets smaller, even if the number in your account stays the same.

Prices rise more slowly than the money supply because a large part of the new money flows into shares, bonds and property. That's why money supply growth feels worse for savers than the official inflation rate suggests. The figures on the loss of purchasing power of the euro and franc are in the article Inflation and loss of purchasing power.

What you can and can't do with M2

M2 is useful as background. When central banks expand the money supply strongly, that's a tailwind for bitcoin. When they pull it back, as in 2022, you should expect difficult months.

M2 is not useful as a buy signal. If you had waited in 2023 for the money supply to grow again, you would have missed most of the recovery. If you bet on rising prices in 2026 because of a growing money supply, you're sitting on a loss.

For long-term holders, a model that shows where the price stands relative to its own trend makes more sense.

Where bitcoin stands on Nov 12, 2026

Bitcoin trades at 0.66 times the trend and so in the Accumulation zone (0.62–0.79×), about 7% above the floor. The model is a description of the past, not a guarantee. How it is calculated is in the methodology and in the article Bitcoin Power Law explained.

Instead of waiting for the next money supply figure, you can buy regularly and smooth out the swings that way. Work out your savings plan in euros or francs:

If you're going through a decline like 2026 and struggling to hold on, the article HODL psychology: coping with volatility can help. How money, central banks and bitcoin fit together in principle is explained in the academy under Understand & secure.