Bitcoin is trading nearly 50% below its implied fair value based on global money supply trends, according to CF Benchmarks.
Global M2 has grown 12% since mid-2025, yet Bitcoin has dropped roughly 35% over the same period. One model from the Kraken-owned index provider points to a fair value of about $136,000 versus Bitcoin’s current price near $70,000-the widest gap on record between the cryptocurrency and this key liquidity metric.
Historically, expansions in money supply have fueled rallies in risk assets, with Bitcoin often outperforming equities. But today, tight U.S. monetary policy is blocking that transmission.
The Federal Reserve has trimmed its balance sheet to $6.7 trillion from a $9 trillion peak and kept interest rates elevated, anchoring financial conditions despite broader liquidity growth. As a result, Bitcoin remains tethered to real rates and risk sentiment-not headline M2 figures.
Compounding pressure comes from rising energy costs. U.S. gasoline prices have jumped 81 cents since late February, potentially costing households $740 annually-eroding the benefit of larger tax refunds and shrinking discretionary capital for crypto and equities.
Geopolitical tensions, including U.S.-Iran conflict risks around the Strait of Hormuz, have pushed oil above $100 a barrel recently, stoking inflation fears.
Still, structural demand may offer a lifeline. Spot Bitcoin ETFs and corporate treasury allocations-absent in prior cycles-are creating new baseline support. CF Benchmarks’ Gabe Selby notes past divergences between M2 and Bitcoin resolved within quarters, especially when the Fed pivots toward easing.
The critical question: When will that pivot come?