Bitcoin Well Below Global M2 Fair Value; Rebound Predicted
Bitcoin is trading well below a fair value estimated from global M2 money supply, prompting some analysts to predict a sharp rebound while others question the M2 link.
New analysis shows Bitcoin trading significantly below a fair value derived from global M2 money supply. The Bitcoin-to-gold ratio sits roughly two standard deviations below the liquidity-adjusted trajectory, producing a negative Z-score near -2.
Crypto trader RobynHD highlighted the divergence on social media and shared a chart from Andre Dragosch, head of research at Bitwise Europe, comparing the BTC-to-gold (BTC/XAU) ratio with a fair-value line based on global M2. Global M2 is at record highs.
Proponents of the M2-based view point to a historical positive correlation between Bitcoin price moves and periods of money-supply growth. They argue the current gap between market price and the liquidity-adjusted fair value implies Bitcoin is undervalued and could see a rapid repricing to align with the liquidity signal. RobynHD wrote, “Bitcoin is currently trading at a level that has historically almost always been erroneous, because it’s massively below its global liquidity fair value,” and added that “a Z-score near -2 has never occurred historically and points to the point of maximum mispricing.”
Other analysts reject the M2 framework. Julio Moreno, head of research at on-chain analytics firm CryptoQuant, called the Bitcoin–M2 correlation “flawed from the design stage,” noting there is no daily global M2 series and that China accounts for a large share of M2 growth. A trading account, Cryptic Trades, pointed to timing problems in past cycles, observing that global M2 peaked after Bitcoin reached its 2022 lows, which would have misled investors relying on M2. Analyst Rekt Capital noted Bitcoin’s 2021 peak came months before global M2 topped in 2022.
The analysis normalizes Bitcoin against gold using the BTC/XAU ratio and maps that ratio onto an M2-derived fair-value line to reflect changes in overall liquidity. The current spread between market price and the liquidity-adjusted fair value is the basis for the calls of a potential upside correction.
Market participants are weighing the liquidity signal against other factors, including historical Bitcoin price cycles, macroeconomic trends and flows into equities, which recently reached record highs while crypto markets diverged. Analysts and traders continue to monitor price action and liquidity measures for further confirmation.
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