Bitcoin Price May Still Decline Despite Global M2 Supply Surge

The crypto market has been experiencing turbulence for weeks, and despite recent increases in global M2 supply, Bitcoin's price may still decline. Global M2 money supply jumped by approximately $1 trillion in a single week, with China accounting for roughly 80% of that increase, or $800 billion. This growth can typically push money into stocks, crypto, and real estate, but it appears to have had little impact on Bitcoin.

A recent report from Alphractal highlighted the historical correlation between declines in Global M2's year-over-year growth and Bitcoin price bottoms. However, this time around, YoY M2 growth remained positive, with no clear move into negative territory. This suggests that Bitcoin and altcoins could still slide lower before a reversal emerges.

The limited exposure to Bitcoin from China is also worth noting. Despite being one of the largest contributors to Global M2's surge, Hong Kong's Bitcoin spot exchange-traded funds (ETFs) absorbed only 48.1 BTC since August began, worth roughly $3.057 million. Mainland China remains hostile to cryptocurrency and has largely banned the asset class.

The U.S., on the other hand, saw a significant increase in money supply, reaching $23.16 trillion. This may have contributed to the recent strong inflow of $1.10 billion into U.S. crypto ETFs, which could filter through to Bitcoin and select altcoins in the near term.