When M2 money supply and the dollar move Bitcoin price – The truth influencers aren’t telling you

Influencers often oversimplify the relationship between rising M2 money supply or a weakening dollar and Bitcoin's price. Analysis over the last year shows that while Bitcoin's price co-moves with M2 (liquidity) and moves inversely to the DXY dollar index on a macro level (level correlations of 0.78 and -0.58 over 203 days, respectively, when M2 is shifted 84 days forward), this is not a day-to-day phenomenon.

Lag tests on daily returns indicate that Bitcoin returns correlate most strongly with M2 moves about six weeks prior (42-day lag, correlation 0.16) and inversely correlate with DXY moves about one month prior (33-day lag, correlation -0.20). The relationship is highly dependent on the market regime; during the pre-peak period, M2 correlation was high (0.89), but it flipped negative (-0.49) in the post-peak drawdown phase, while the inverse dollar link remained strong.

The conclusion is that M2 acts as a slow, multi-month trend compass, while the dollar acts as a faster gatekeeper that can block or accelerate Bitcoin's path. Alignment between the two factors leads to stronger, smoother correlation, whereas conflict causes the relationship to collapse, requiring analysts to monitor rolling correlations and allow the lag period to float rather than relying on a fixed number.

(Source：CryptoSlate)