I just finished reading an email update from a partner Down Under, feels like we just spoke because we did, on Zoom, a couple of days ago. Good to see they are always keeping me in the loop either that or they just really enjoy my inbox.
For now, I will be busy running simulations on our model for clearer signals as part of risk management and portfolio planning. I cannot wait to see what the numbers reveal about the road ahead.
Position-sizing is everything. When you own the right amount of crypto relative to your portfolio size and risk tolerance, sitting tight through the volatility is not all that hard. However, when you own too much, your emotions are likely to get the best of you.
Here is a section:
One thing that is obvious is the clear uptick in global M2 money supply. By late 2024, U.S. M2 money supply hit USD21.3 trillion, and global M2 money supply reached previous all-time highs, driven by numerous factors. China’s outsized role, its M2 exceeds the US’s, in cutting interest rates and injecting billions into its economy to counter slowing growth and a property sector slump, combined with coordinated easing among the Fed, ECB, and BoJ, suggests a deliberate push to support growth amid trade tensions and slowing momentum.
The global M2 uptick stems from central banks dialling back tightening (or outright easing), fiscal boosts, and a softer dollar, creating a liquidity wave that’s lifting markets and money supply metrics alike. Bitcoin has a high correlation with the M2 money supply, which stems from its role as a barometer of liquidity, monetary policy expectations, and investor behaviour in response to changes in the broader financial environment.
In short, Bitcoin’s high correlation with M2 arises because it is a liquidity sponge, absorbing excess money when central banks ease, and a bet on fiat debasement when M2 grows.
Based on the high correlation of the 107-day offset, Bitcoin could begin its next major move higher around April 30, 2025. The next question will be “How much higher does M2 money supply growth go?”
