Bitcoin Could Capture 10% Of $20 Trillion Global Money Supply Growth In 2025, Analyst Predicts

While the cryptocurrency market is eagerly anticipating Bitcoin (BTC) to surpass the $100,000 price level, the leading cryptocurrency may have more room to grow in 2025 as the global M2 money supply expands.

Rising global liquidity: a catalyst for Bitcoin?

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Coates noted that after reaching its lowest levels of $94 trillion in the fourth quarter of 2022, the global money supply M2 rose to $105 trillion. Over the same period, Bitcoin’s market capitalization has risen five-fold, from approximately $400 billion to nearly $2 trillion at the time of writing. He added:

In other words, 10% of the new money supply leaked out of the monetary system into the emerging global Bitcoin reserve assets (gold, stocks, etc. absorbed new money as well). What happens if M2 expands by the usual $30 trillion this cycle?

It is worth noting that Global money supply M2 It is expected to exceed $127 trillion in 2025 due to global liquidity concerns – an increase of more than 18% from the current amount of $107 trillion. Assuming that 10% of this increased liquidity – about $2 trillion – is captured by Bitcoin, the price of the digital asset could rise significantly in 2025.

To bolster his argument, Coates shared the following chart comparing the Fed’s balance sheet expansion, US M2 money supply growth, US real wage changes, and Bitcoin price performance. The data reveals that BTC has significantly outperformed other instruments, especially as the value of the US dollar declines as supply increases.

Divergent views on BTC and money supply correlation

While some analysts expect Bitcoin to benefit from the increased money supply, opinions differ on the strength of this correlation. The global M2 money supply, which includes all cash and short-term bank deposits, is expected to peak by January 2026 before contracting to $118 trillion later that year. Along this path, Bitcoin will likely reach $150,000.

On the other hand, cryptocurrency analyst Joe Consorti said to caution BTC’s correlation to the global money supply M2 could cause it to fall by 20% to 25%, all the way to $70,000. In response, businessman David Quintieri said that bitcoin is too volatile to be meaningfully traceable to anything.

2024 was a pivotal year for the leading cryptocurrency, with the approval of Bitcoin exchange-traded funds (ETFs) in the US, the Bitcoin halving, rising institutional adoption, and the victory of pro-crypto Donald Trump in the November election.

Against this bullish backdrop, it is not surprising to see this ambitious BTC price targets are shared by institutional investors. Bitcoin is trading at $97,944 at press time, up 3.1% in the past 24 hours.

Featured image from Unsplash.com, charts from X.com and TradingView.com