On November 13th, the cryptocurrency analyst Willy Woo stated that “the market does not adhere to the expansion of global M2 supply; rather, it is of a speculative nature. This implies that the market will anticipate and price in expected liquidity in advance. Risk assets usually lead M2. Consequently, at the global top, one will observe the S&P Index peaking ahead of time, and Bitcoin will also reach its peak earlier. This is because Bitcoin can serve as a liquidity perception mechanism.” Moreover, M2 is a flawed metric. When evaluating the total fiat supply in the system by measuring in dollars, it is noted that only about 17% is actually in dollars, with the rest in foreign currencies. Thus, M2 actually reflects more the strength of the dollar. In fact, there is a more appropriate metric, which is the DXY (Dollar Index), and it is much more reliable when evaluating the correlation with Bitcoin.”
