The alignment of the planets continues. While the United States wants to accumulate “As much bitcoins as possible”the overall money supply climbs again.
Bitcoin vs m2
The correlation between bitcoin and global money supply (M2) is a lot of talk lately.
As a reminder, central banks can slow the pace of monetary creation by increasing the rates and vice versa. In the long term, the M2 monetary mass of advanced countries grows by 7 % per year.
In other words, if economic production remains stable, money loses 7 % of its value each year. Which gives us a loss of 50 % after ten years …
Increasing the production of goods and services makes it possible to absorb monetary creation. But without growth, wages cannot follow inflation and savings loses its purchasing power.
This is the situation in which we find because of the growing difficulties in extracting energy essential to growth. Not to mention government mismanagement that does not work. And since inflation encourages to swap its savings for an asset desirable, M2 is a good advanced indicator for the price of bitcoin.
This correlation is not perfect, but historically, the increase in global money supply often leads to an influx of capital to desirable assets such as bitcoin, actions and raw materials.
The most desirable asset is today Bitcoin. For many reasons perfectly articulated by Michael Saylor on the occasion of the Digital Asset Summit from New York this week.
In short, the figures show that Bitcoin tends to follow the evolution of the money supply with a discrepancy of around 70 days. The M2 Guy expects Bitcoin to take its march forward March 25. Who will live will see.
[La courbe jaune représente la masse monétaire globale M2. Elle est décalée de 70 jours vers la droite pour suggérer la direction que le bitcoin est sur le point de prendre.]
It smells of fresh ink
It is true that the Fed slowly lowers its rates for fear of a revival of inflation due to customs taxes. That said, the dollar M2 monetary mass is already up 4 % compared to the past year.
This is the fastest monetary expansion rate for 30 months. We are in the eleventh consecutive month of increase in M2 ($ 21,600 billion). We are at a hair of the historic record reached in April 2022.
The global money supply has increased by $ 2,000 billion in the past two months. Or the equivalent of $ 102,600 billion in all:
In addition, China, the world's leading world economy of purchasing power, is about to accelerate monetary printing!
Prime Minister Li Qiang announced this month a target of real GDP growth of 5 %for 2025. The objective of inflation is 2 %, which gives us an objective of growth of nominal GDP of 7 %.
According to Fortune magazinethese objectives will need to grow the money supply by 10 %, against 7 % currently. Not to mention that inflation is down 0.7 % from one year to the next, which is indeed 2 % desired.
This is why Beijing recently enhanced its target of public deficit of 3 % to 4 % of GDP for 2025. Some Chinese economists still count on 10 %!
This is a rupture of the long -established agreement in 1999, according to which Beijing would endeavor to maintain the deficit within 3 %, as required in principle the Maastricht Treaty of the European Union.
Imminent Bull Run
The growth of the global money supply is auspicious for Bitcoin, as well as the American strategic reserve …
The traders sold the news, but patience. Let us not forget that the decree of the American president is responsible for the Treasury and Trade departments to develop neutral budgetary strategies in order to accumulate more BTC.
The key expression of the decree is “Budgetary neutral”which means that the operation will not cost taxpayers anything, but also that it does not require a conference authorization … The US government could for example sell gold to buy bitcoins.
That said, a law (Bitcoin Act) is already in the hands of senators, which could make things easier. Cynthia Lummis, however, said this week not having a majority, for the moment.
Other senators are however confident. This is the case Tom Emmer who thinks that the bill to buy 1 million BTC will be adopted:
Many nations are very interested in Bitcoin as an international reserve currency. And not least. The United Arab Emirates and Russia, two member countries of the BRICS, are on deck.
The United States will undoubtedly cause a snowball effect and many analysts who see bitcoin reach $ 400,000 in the coming months. Michael Saylor predict that he exceeds Google, Apple and even gold in 48 months.
Don't miss our article: The United States will erase the debt thanks to Bitcoin.
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