Despite a notable surge in global money supply, Bitcoin has failed to deliver the strong gains that enthusiasts and market observers anticipated. Once synonymous with decentralized finance and famed for its alignment with liquidity trends, Bitcoin appears to be losing its historic correlation with global liquidity. Data and recent analyses suggest the leading cryptocurrency is not fully capitalizing on increased liquidity, raising questions about its future trajectory and resilience in the evolving macroeconomic landscape.
Money Supply Expands While Bitcoin Lags
The worldwide M2 money supply has increased by approximately 12 percent in recent times, yet Bitcoin’s price has suffered a staggering 35 percent drop during the same period. Market experts point out that, historically, Bitcoin tended to move in tandem with broad money supply growth, a pattern that now seems to be unraveling. This marked divergence has become a focus for those trying to make sense of the cryptocurrency’s current underperformance.
According to research by CF Benchmarks, Bitcoin’s “fair value”—calculated using its historical relationship with the M2—should be around $136,000. Yet the market price hovers near $70,000, representing the largest gap between calculated value and trading price ever recorded. Gabe Selby, who leads the research team, noted that such discrepancies have typically closed over time, but this time, the gap appears to be widening rather than narrowing.
High Interest Rates and Energy Costs Disrupt Bitcoin Dynamics
Experts point to two primary drivers behind this growing disconnect between Bitcoin and liquidity: rising interest rates and escalating energy costs. Soaring rates have significantly dampened risk appetite, with investors gravitating toward safer assets like government bonds, which now offer attractive yields. As a result, Bitcoin—classified as a high-risk asset by most—has experienced a marked drop in demand.
On top of that, the burden of rising energy prices is weighing heavily on cryptocurrency miners. Electricity expenses make up the bulk of operational costs for miners, and as energy prices climb, mining becomes less profitable. Many miners are being forced to sell their holdings to cover these heightened costs, introducing a new wave of selling pressure into the market.
“Miners are bleeding. Energy costs are surging and miners are the most exposed. Higher fuel bills mean higher production costs, which means compressed margins, which means one thing: forced selling.”
In an effort to keep their operations running, mining companies have little choice but to liquidate assets. This sustained selling activity constitutes a structural pressure on the market, creating a headwind that has capped the cryptocurrency’s upward momentum in recent months.
Similar dynamics are playing out in U.S.-listed Bitcoin spot ETFs. Over the last seven sessions, inflows totaled $1.16 billion, yet a single day saw $129 million in outflows and the price dropped by four percent. Such volatility highlights just how sensitive the market has become to shifting capital flows and macroeconomic sentiment.
According to specialists, the $69,000 to $70,000 price range now provides a critical support zone in the short term. Should prices fall below this level, a decline toward $60,000 becomes a real possibility. On the upside, breaking above $72,000 could signal a narrowing of the gap between money supply growth and Bitcoin’s valuation, hinting at a possible recovery of Bitcoin’s lost momentum.
