The M2 money supply expansion indicates a potential extended Bitcoin bull market

Historical Bitcoin market cycles have been closely tied to the M2 money supply and the expansion of liquidity.

On October 22, market analyst Michaël van de Poppe delved into data points and correlations with cycle peaks and money supply. He noted that in 2017, the supply of M2 continued to expand significantly, and the cycle lasted until the end of the year, with BTC peaking at $20,000.

During the 2021 bull market, the supply of M2 increased and crypto markets followed suit, peaking in November of that year. However, the money supply continued to expand until 2022, but markets remained depressed that year due to interest rate hikes and the collapse of several high-profile crypto companies.

Impacts on the money supply

The analyst predicted that this cycle would be extended if the M2 money supply continued to grow for another year and a half.

“As a general thesis, if the supply of M2 expands through mid-2026, liquidity expansions will likely extend the cycle.”

This chart shows some very important data points that I think are important for this cycle.

– In 2016-2017 the supply of M2 continued to expand significantly, through which the cycle was extended until the end of 2017.

– In 2021, M2 supply was basically vertical, after which… pic.twitter.com/z1QuikfbVG

— Michaël van de Poppe (@CryptoMichNL) October 22, 2024

The money supply M2 is a measure of the amount of money in circulation. It includes M1 money, which is physical cash and deposits, plus currency that is “less liquid”.

It is currently growing at a rate of 2.59%, which just surpassed the US inflation rate of 2.44%. Moreover, it has been rising since the beginning of this year and is currently at $21.2 trillion, according to the Fed in St. Louis.

Market strategist Charlie Bilello commented on the growth rate, stating, “After a brief hiatus, money printing is back.”

The US money supply grew 2.6% over the past year, the biggest year-over-year increase since August 2022. After a brief hiatus, money printing is back.https://t. co/l5IYmkeySJ pic.twitter.com/j9YdcpX2A0

— Charlie Bilello (@charliebilello) October 23, 2024

On October 23, WeRate co-founder Quinten Francois also shared the M2 growth chart, exclaiming, “A tsunami of printed money is coming and will take BTC to 6 figures.”

Where to go in the short term?

BTC has retreated about 3% from its multi-month high of $69,500 on October 21 to trade around the $67,000 level, where support was held during early Asian trade on Wednesday.

Reflexivity Research co-founder Will Clemente noted that Bitcoin is “turning last month’s demand highs here,” suggesting it could be forming a new support base to go higher.

I rarely post on low time frame TA/price action, but BTC seems to be turning last month’s highs into demand here. pic.twitter.com/cyU1RweWx6

— Will (@WClementeIII) October 22, 2024

Meanwhile, ‘Daan Crypto Trades’ told his 389,000 X followers that he doubts there will be a new all-time high ahead of the November 5 US election “unless the odds of Trump improve dramatically and ETF inflows continue coming in,” before adding that the “base case is still relatively choppy at $65,000 to $70,000 until the election.”

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