M2-Only Bitcoin Price Predictions (2025-2026): Global Liquidity-Driven Forecast (Zero Other Variables)

Using M2 money supply data only (zero other variables), I forecast Bitcoin's peak bull market price & timing for 2025-2026...

I already wrote about Bitcoin vs. M2 (Global & U.S.) and discussed things like: historical relationship (how its evolved); latency (between M2 & BTC movement); current estimated correlation; potential causality; and degree of predictivity.

In that piece I provided some rough estimates for peak Bitcoin’s price and timing in the 2025-2026 cycle using M2 data within the “big picture” (considering other variables).

In this analysis I hyper-focused on solely M2 money supply data to present (2025) to forecast Bitcoin peak price range & timing for the 2025-2026 market cycle.

We will reflect back in a year or so and determine how well isolated M2 data predicted Bitcoin’s price movement (BTC) in 2025-2026.

Key elements in this analysis include:

• BTC Lag vs. M2 & Cycle Dynamics: Historical studies suggest that Bitcoin typically responds with a lag of approximately 2-6 months to changes in M2. Also, the correlation between M2 and Bitcoin tends to be stronger during bull market cycles and weaker during bear phases.

• Prediction Based Solely on M2: Our predictions for 2025 and 2026—ranging from the anticipated bull market peak to the potential downward correction—are derived exclusively from M2 data. This “M2-only” approach enables us to assess the extent to which liquidity conditions, as measured by both U.S. and Global M2, can forecast Bitcoin’s cyclical behavior without the influence of other variables.

Related: Predicting Bitcoin’s Price in 2030 Based Only on Trends in Adoption, Holdings Growth, HODL Duration

---

Current & Projected M2 Figures (U.S. & Global)

A.) U.S. M2

December 2024

• $21.63T total supply, up +3.87% year-over-year.

• Sits slightly below the $21.72T peak (April 2022), but 2024 has seen modest growth.

End of 2025 Projection

• Expected to reach $22T (a ~+1.7% increase from $21.63T).

• This mild YoY rise reflects somewhat looser monetary conditions (e.g., mild rate cuts or QE-lite measures).

Into 2026

• Forecast to stabilize or slightly contract to about $21.8T.

• This indicates a mild tightening phase if inflation remains contained and the Fed dials back liquidity injections.

B.) Global M2

From 2023 to End-2025

• Projected to climb from $107T (2023) to $127T by late 2025—+18% total growth.

• On an annual basis, that implies roughly +5–8% YoY expansions, though certain quarters could see a peak near +10%.

Into 2026

• Likely to peak or plateau near $127T in early or mid-2025 (or linger at that level until late 2025), then contract toward $118T by the end of 2026 (~-7%).

• Regional differences apply: the Eurozone and Japan remain cautious, while emerging markets like China might expand more aggressively until mid-2025.

Key Implication for BTC (2025–26)

• 2025: Overall positive liquidity environment from +5–8% yoy expansions supports a bullish stance for high-beta assets.

• 2026: A shift to negative yoy expansions suggests a risk-off turn, typically exerting downward pressure on BTC’s macro cycle.

Note: It is known that Trump tariffs will likely be issued for Canada, Mexico, China, EU, et al. I did NOT factor tariffs into the “main analysis” because we cannot predict: whether they’ll be enacted, how long they’ll last, and actual impact. There’s a separate “add-on” section in which tariff impact was considered. (Impact? Quicker & blunted peak.)

---

Historical Correlation & Observed Lag (M2 & Bitcoin)

A.) Correlation Strength

1. Directional Alignment: Historically, Bitcoin moves in the same direction as global liquidity about 83% of the time on an annual basis.

2. Current (Late 2024–Early 2025) Partial Data: Correlation (r) is ~0.60–0.65, comparable to the 2020–21 bull phase. Suggests broad alignment between yoy expansions (particularly global M2) and BTC’s ongoing uptrend.

B.) Shorter Lag Observed (2–4 Months)

Monthly data from late 2024 to early 2025 indicates a 2–4 month delay between changes in M2 yoy and BTC’s price surges, reminiscent of a “70-day” (~2–3 months) figure that some analysts highlight.

Why Shorter This Cycle?

1. Front-Running: Investors may anticipate liquidity expansions earlier, especially with BTC already near $100K in early 2025.

2. Institutional Inflows: Larger players respond more swiftly to macro signals than in earlier cycles, compressing the lag.

C.) Macro vs. Crypto Cycle End

• We still keep a broader 3–6 month horizon for major cyclical apexes.

• Past cycles show that big blow-off tops often appear a quarter or two after yoy expansions truly flatten out.

• Current partial data shows a shorter-lag effect for incremental rallies, but the final bull peak could still follow a slightly longer macro timetable (e.g., 3–5 months after yoy flattening).

---

Bitcoin Price Projections & Timing of Bull Peak for 2025 (M2-Driven Only)

We start knowing that BTC is ~$100K in early 2025. These forecasts rely solely on the correlation between yoy M2 expansions and BTC’s cyclical gains.

A.) Deriving BTC “Elasticity” to M2

Historical Patterns

• 2020–2021: M2 yoy soared to ~+20–25% at peak, pushing BTC from ~$9–10K to $50–60K (a ~5–6x jump).

• Late 2024–Early 2025: yoy expansions are more modest (+5–8%), yet BTC advanced from $50–60K to $100K (~+70–100%).

Approximate Rule

• Each +1 percentage point in yoy M2 expansions above “baseline” (~+2–3% yoy) can yield +15–25% BTC gains from the starting point of a bull run, if correlation remains robust (r ~0.60).

• More extreme expansions or crypto mania can exceed this range, but it’s a workable midpoint.