Bitcoin lags global liquidity at record highs as M2 hits $135 trillion

Bitcoin trades 48% below its October 2025 peak even as global M2 money supply hit a record near $135 trillion, the widest divergence between the asset and global liquidity this cycle, according to analytics firm Alphractal.

"Since early 2025, BTC has diverged sharply: while M2 continued making new highs and SPX recovered to near-ATH, BTC has compressed," Alphractal said in a note. The S&P 500 has tracked the liquidity expansion, trading near its own record highs.

The firm outlined two readings of the gap. The convergence view holds that an asset this far below liquidity has historically closed the distance through price appreciation. The structural view treats the Bitcoin-liquidity link as non-mechanical — past divergences in 2018 and 2022 resolved over six to 18 months, and the correlation can weaken as the holder base shifts.

"Which reading applies depends on whether the current divergence reflects a temporary dislocation or a structural shift in BTC's correlation regime," Alphractal said. As of 14:00 UTC, BTC traded at $64,126, down 0.9% on the day, according to CoinGecko.

Whales Accumulate as Institutional Flows Fade

Despite the price compression, large holders are adding. Addresses holding 1,000 or more BTC now control about 7.17 million coins, their highest since March 14, according to Santiment. Exchange reserves have fallen roughly 80,000 BTC since February as coins move into storage, and wallets with a history of holding absorbed about 125,000 BTC in the first half of June.

The accumulation cuts against institutional flows. Spot bitcoin ETFs lost $82 million and ether funds $29 million on Wednesday after the Federal Reserve turned hawkish, with Chair Kevin Warsh's first meeting projecting the policy rate ending 2026 at 3.8%, up from 3.4% in March. Markets now put the odds of a rate increase as soon as October near 60%, according to CME FedWatch.

A 113% Historical Edge at the 200-Week Average

Bitcoin briefly slipped below its 200-week moving average twice in the past two weeks, a level that has historically marked strong entry points. According to Kraken, buyers at this level have seen median returns of 113% over the following year and 313% over two years. The median time to break even has been just two days, with a median maximum drawdown of 9% over the subsequent year.

"Past performance is no guarantee of future results. But the historical record makes a clear case: at these levels, bitcoin has tended to offer immense value," J.D. Perfumo, head of research at Kraken, said.

The options market, however, points to near-term caution. Whale-sized buying of bitcoin put options at the $62,000 strike expiring June 21 saw 1,750 contracts hit the tape, with buyers paying over $600,000 in premium, according to Laevitas.

The question for Bitcoin remains whether the liquidity divergence resolves through price gains — as history suggests — or marks a structural decoupling from the macro backdrop that has supported risk assets for years.

This article is for informational purposes only and does not constitute investment advice.