Previously, Bitcoin’s performance was closely tied to global M2 growth, with capital flowing into risk assets as this metric expanded. This dynamic fueled the bull market from 2020-2021, leading crypto analysts in early 2024 to predict another surge based on M2 data.
Despite continued expansion of global M2, Bitcoin has struggled to perform well recently. Liquidity is growing, but dollar strength is tightening conditions before they can impact Bitcoin significantly (Gino Matos, April 1, 2026).
In March 2026, US M2 reached nearly $22.7 trillion, a year-over-year increase of 4.6%. However, during this period, Bitcoin struggled to maintain levels above $76,000, identified by Real Vision’s Jamie Coutts as significant resistance on CryptoQuant’s Unbiased podcast.
Coutts suggests that the method through which liquidity impacts financial assets has shifted post-2008 QE era. Unlike before, when asset purchases directly increased bank reserves flowing into equities and crypto, today’s dynamics are influenced by Treasury issuances and reserve management. By March 2026, US M2 grew by 4.6%, but Bitcoin couldn’t surpass $76,000 resistance.
A significant issue is the growing gap between debt and money supply. As of late 2025, US public debt hit over $38.5 trillion (a year-over-year increase of 6.3%), surpassing M2 growth by nearly two percentage points annually. This results in a ratio where debt is approximately 1.70 times total M2, unprecedented in a supposedly supportive monetary environment.
The Treasury’s borrowing estimates for the January-March and April-June quarters of 2026 included $574 billion and $109 billion, respectively, while maintaining over $1 trillion in cash reserves. The Treasury General Account at the Federal Reserve held around $1 trillion, affecting reserve balances, which fell to approximately $2.9 trillion as of April 22, 2026.
Bank credit continues to grow, with commercial loans reaching about $13.7 trillion by mid-April, largely absorbed by real-economy activities. At its Apr. 29 meeting, the FOMC kept policy rates steady at 3.5%-3.75%, and total assets around $6.7 trillion, citing inflation concerns.
Coutts attributes Bitcoin’s recent underperformance to issues in financial system infrastructure rather than M2 data alone. Factors include tightening reserve conditions, Treasury dynamics, and the increasing role of ETFs and derivatives markets in Bitcoin’s pricing structure.
Cross-market trends show central banks buying more gold as a hedge against sovereign debt risks. The World Gold Council reported first-quarter gold purchases by central banks at 244 tonnes, with total demand reaching 1,231 tonnes worth $193 billion.
Global public debt is projected to hit 100% of GDP by 2029, driven largely by the US and China, according to the IMF’s Fiscal Monitor. The Congressional Budget Office forecasts a federal deficit of $1.9 trillion for FY2026 and public debt rising from 101% to 120% of GDP by 2036.
Two potential outcomes exist: in a favorable scenario, inflation decreases, Treasury cash balance declines, reserves rebuild, and bank credit expands without causing growth concerns, potentially allowing Bitcoin’s liquidity thesis to regain traction. Conversely, persistent heavy debt issuance, sticky inflation, ongoing Treasury funding challenges, and a cautious Fed could exacerbate financial conditions, making Bitcoin behave more like a high-risk asset.
Coutts regards the $60,000 level as a value floor for Bitcoin, with over 50% probability that its cycle low is already behind. The key issue for investors remains whether liquidity growth can outpace debt and Treasury supply to support risk assets effectively.