The renowned economist and investor, Raoul Pal, links most of Bitcoin’s price movement over the past two years to a singular factor: the increase in global money supply (M2). According to Pal, this growth in the money supply is the primary determinant of Bitcoin’s performance, making other news appear insignificant or mere “noise.” Meanwhile, Anthony Pompliano expresses the opinion that Bitcoin could potentially serve as the “new bonds.”
Impact of Global Money Supply Growth on Bitcoin Prices
Real Vision co-founder and macroeconomic expert, Raoul Pal, shared on his official X account a graph that reveals a correlation between Bitcoin’s price movement and the expansion of the global money supply (M2) over the last two years. As demonstrated by Pal, the surge in global liquidity since 2023—resulting from the injection of trillions of dollars into the economy—has elevated M2, closely followed by Bitcoin’s price increase.
Pal’s analysis explains 89% of Bitcoin’s price movement through this correlation. Therefore, he states, “By definition, almost all ‘news’ and ‘narratives’ are noise.” Additionally, Pal believes that Bitcoin is contributing to the debasement of the US dollar’s value.
Towards the weekend, amid escalating geopolitical tensions in the Middle East, Bitcoin experienced a sharp decline of over 4%, plummeting from $108,000 to the $103,000 region within hours. Although the largest cryptocurrency partially recovered to surpass $105,000, it continues to display a volatile pattern.
Possibilities for Bitcoin as the New Bonds
Famous angel investor and Bitcoin enthusiast, Anthony Pompliano, voiced his belief that Bitcoin is the “new bonds” in a recent post. Pompliano remarked, “Once this concept is accepted, everything begins to make much more sense.” This outlook aligns with the “BitBonds” concept presented in a Forbes article published in April.
The Forbes article suggests that US Treasury bonds could be supported by Bitcoin. Under such circumstances, as a portion of bond revenue ties to Bitcoin’s capped supply of 21 million, interest costs could potentially decrease.
The article highlights the Trump administration’s new economic direction following President Donald Trump’s declaration of Bitcoin as a strategic reserve asset and his executive order to create a Strategic Bitcoin Reserve. This reserve notably includes approximately 200,000 BTC seized in operations, particularly associated with Silk Road and other illegal activities in recent years.
