What this shows
"Bitcoin follows global liquidity" is one of the most shared charts in crypto: the money supply and the BTC price drawn on top of each other, often shifted by about ten weeks so the lines line up. This page checks how much of that holds up.
We use US M2, the broad measure of dollars in the economy: cash, checking and savings deposits, and money market funds. It is published monthly by the Federal Reserve (FRED series M2SL, seasonally adjusted, monthly average). Bitcoin is the average of daily Bitstamp closes for the same month, so both numbers describe the same period. History starts in September 2011.
M2 is released with a delay of about a month, so the latest reading always trails today's date.
Why the popular chart is misleading
Money supply grows almost every year. Bitcoin's price has also risen enormously since 2011. Any two series that both trend up will show a high correlation of their levels, whether or not one has anything to do with the other. That is why the first row of the table above is close to 1.
To test whether Bitcoin actually responds to money supply, you have to compare changes:
- Year-over-year growth removes the long-term trend, but each 12-month window overlaps the next by 11 months, so the correlation still looks stronger than the evidence behind it.
- Monthly changes are the cleanest test: when M2 grows faster than usual in a month, does BTC do better that month, or a few months later? Over the full history this correlation sits inside the noise band, meaning it can't be told apart from zero.
The rolling chart makes the same point visually. Over any two-year window the correlation can be strongly positive, then swing to strongly negative a year later. A relationship that flips sign this often is not something you can trade on its own.
Does M2 lead Bitcoin?
The usual claim is that liquidity moves first and Bitcoin follows with a lag of 10–12 weeks. The lag table tests BTC 0 to 6 months after the M2 move. At the time of writing no lag lifts the monthly correlation clearly out of the noise band. Picking the lag that happens to fit best is also a classic way to find a pattern that isn't there: with seven lags to choose from, one will always look a little better than the others by chance.
What this does and doesn't mean
- Liquidity does matter for risk assets in big regime shifts. The 2020–2021 money printing and the 2022 tightening both lined up with large Bitcoin moves, and the correlation since 2020 is higher than over the full history.
- Outside those shifts, month-to-month M2 data tells you very little about where Bitcoin goes next.
- US M2 alone is only part of the story: see the section below on the three largest economies.
Beyond the US: three economies in dollars
"Global M2" charts add the money supply of other large economies, converted to US dollars. We do the same for the three largest we can source reliably and for free: the US, the euro area (from the ECB) and Japan (from the Bank of Japan). Together they make up about $50 trillion. China, usually the biggest single piece of global M2 charts, has no free and current public data source, so we don't call this series global.
Converting to dollars changes the picture. When the dollar weakens, euro and yen money supply is worth more in dollars, so the series rises even if no new money was created. A weak dollar has also tended to be good for Bitcoin (see the dollar index page). As a result:
- Year-over-year growth lines up better with Bitcoin than US M2 does, especially since 2020.
- Monthly changes in the same month still show nothing.
- The lag scan finds one lag that stands out: about three months, close to the popular "10–12 weeks" claim. It clears the usual noise band, but only just clears a stricter one that allows for the seven lags we tried, so treat it as suggestive rather than proven.
Much of what "global liquidity" charts show is the dollar exchange rate, measured in a roundabout way.
Use M2 as background context about the macro environment, together with other indicators such as the Bitcoin mining cost and the Fear & Greed Index, not as a timing signal.
FAQ
Is Bitcoin correlated with the M2 money supply? Their price levels are highly correlated because both have risen for years, but that says little. Comparing monthly changes, the correlation over the full history is close to zero; year-over-year growth shows a weak positive link that changes sign from one period to the next.
Does M2 lead the Bitcoin price by 10 weeks? For US M2, no: none of the lags from 0 to 6 months gives a monthly correlation clearly above noise. For the US, euro area and Japan combined in dollars, a lag of about three months stands out, but only marginally once you allow for testing several lags, and much of it reflects moves in the dollar.
What is M2? M2 is a broad measure of money: physical currency, checking and savings deposits, small time deposits and retail money market funds. The US figure is published monthly by the Federal Reserve.
Do you show global M2? We show the US alone and the US, euro area and Japan combined in dollars, about $50 trillion. China is left out because there is no free, current public source for its money supply, so we don't label the series global. Converted to dollars, it also moves with exchange rates, which is a big part of what global M2 charts show.
How often is this page updated? The data is recalculated daily. M2 itself changes once a month, when the Federal Reserve publishes a new figure.