M2 money supply is surging again – so why isn’t this bullish for Bitcoin anymore?

The U.S. M2 money supply reached a record nominal high of $22.442 trillion in January 2026, yet Bitcoin has not shown a corresponding bullish reaction as it did in previous cycles. This decoupling is attributed to several factors: the real (inflation-adjusted) M2 remains below its 2021 peak, and M2 velocity is historically low, suggesting money is sitting in cash-like assets rather than chasing risk. Furthermore, the relationship between U.S. liquidity and Bitcoin is global, lagged (often by 90+ days), and regime-dependent, currently being overridden by stronger forces like the strength of the U.S. dollar, elevated real yields, and geopolitical risk. Market structure has also shifted, with spot Bitcoin ETFs and stablecoins acting as new, dominant flow channels whose demand swings can offset broad liquidity tailwinds. Analysts suggest three scenarios for 2026: a lagged catch-up rally if the dollar weakens and ETF flows turn positive; Bitcoin remaining range-bound if liquidity remains idle (low velocity); or a risk-off reset if stagflationary shocks persist. For Bitcoin to benefit from the record nominal M2, the market needs a transmission mechanism, likely signaled first by improving ETF flows and stablecoin expansion.

(Source：CryptoSlate)