M2's Missing Link: Why Bitcoin Isn't Responding to Global Liquidity

Bitcoin's price has been hovering around $78,573, leaving many wondering why it hasn't responded to the expansion of global money supply. According to historical trends, a 2× move would put BTC near $157,146, which is about 24.5% above its previous all-time high of $126,198.

However, traders often overlook that M2 measures money and highly liquid monetary assets but does not guarantee where the marginal dollar will be invested. For Bitcoin to benefit, expanding liquidity must ultimately reach investors willing to take risk and invest in BTC.

Historically, a simplified transmission mechanism looked like: M2 expands → financial conditions ease → capital moves further out on the risk curve → Bitcoin receives demand. But this transmission is not guaranteed and can be disrupted by factors such as large-scale AI capital expenditure that absorbs capital from circulating through financial markets.