Bitcoin’s latest behavior reflects a divergence in its historical relationship with global M2 money supply. A new analysis from CF Benchmarks reveals that M2 money supply has risen about 12% since mid-2025, while Bitcoin declined roughly 35% over the same period.
Source:
CF Benchmarks
The report cited Bitcoin’s “fair value” of about $136,000, compared to its current price near $70,000, as a significant divergence that highlights the growing gap between BTC and M2 money supply, a metric long viewed by analysts as a proxy for global liquidity.
Historically, Bitcoin has shown strong sensitivity to liquidity expansion, similar to equities and other risk assets. According to Gabe Selby, Head of Research at CF Benchmarks, the key takeaway from more than a decade of data is that divergences between M2 and Bitcoin have historically been temporary.
Analysts reviewing the situation link the divergence to US monetary policy, which has seen the Federal Reserve reduce its balance sheet to around $6.7 trillion from a peak near $9 trillion in 2022. Notably, the Fed maintained elevated interest rates over this period, keeping financial conditions tight despite the liquidity growth in other areas.
The outcome of these developments is limited capital flows into markets, leaving Bitcoin largely dependent on real rates and broader risk sentiment than on headline money supply growth. Meanwhile, rising energy prices are significantly affecting the global economy and adding pressure to household finances.
Considering historical patterns, the CF Benchmark analysis does not expect the M2-Bitcoin relationship to stay broken for long. It cites the Federal Reserve’s return to balance-sheet expansion as the most direct catalyst for reconnection between the pair. The analysis noted that quantitative tightening has been a persistent headwind for the M2-Bitcoin transmission channel.
According to analysts, a pivot back to net asset purchases, whether driven by financial stress, Treasury market dysfunction, or a deliberate policy shift, would inject base money directly into the system, representing the single strongest factor to accelerate the M2-Bitcoin relationship.
