Curious to read certain pundits claim that there is no correlation between Bitcoin and M2, all Bitcoin peaks and bottoms have coincided perfectly with m2 contractions and expansions.
Discussion
The problem is that the correlation is far from 1.
What do you think the correlation isand why is that a problem?
Because the correlation skews wildly negative depending on the offset.
And that offset is fluctuating.
If you zoom out over a long period of time and squint then, yep, most of the time there’s a positive correlation, tho less likely a strong correlation.
So if you’re an investor and about to make a large bet, you’re gonna want a bit more than a fluctuating temporal correlation and “trust me, bro”.
For us bitcoiners, it doesn’t matter. Always stack.
But for institutions? They’re gonna need more fundamentals.
And if you look into why the global m2 has been growing so much lately, the fundamentals get clearer. Spoiler: it ain’t the US or China printing. It’s India.
Much of the m2 that’s propping up the chart at the moment is washed in trade.
Macro fundamentals look… uncertain.
Add it up, and one fickle indicator ain’t even close enough for the people with large bags of cash or looking to rotate in.
0.94 long term correlation. You’d kill to get such a correlation in social sciences.
Obviously if you're looking for a daily correlation you're not going to find it, but the m2 defines both Bitcoin bottoms and peaks, simply because Bitcoin is a proxy for global liquidity which penalizes money printing.