The Truth About M2 Supply and Bitcoin Prices Exposed! The 84-Day Lag Trap That Influencers Don’t Talk About

Opinion leaders like to use rising M2 charts or a weakening US dollar to “prove” that Bitcoin is about to soar, but the drivers of Bitcoin prices are far more complex. Since the beginning of this year, Bitcoin’s price has shown a correlation of 0.78 with M2 supply and -0.58 with the US Dollar Index (DXY). However, using logarithmic returns, the daily correlation between Bitcoin and M2 drops to just 0.02, and the daily correlation with the dollar index is 0.04.

The 84-Day Lagged Liquidity Myth vs. Reality

(Source: Trading View)

It is often claimed that money printing (i.e., increasing global M2 supply) leads Bitcoin’s price trends by about 12 weeks. The logic is that once more liquidity enters circulation, it takes time to flow into the Bitcoin market. This idea has been repeatedly spread by countless KOLs on X and YouTube, often accompanied by compelling overlay charts.

Actual data shows that the closest correlation does indeed occur within an 84-day (12-week) window. Since 2020, the trend between Bitcoin price and M2 supply (lagged by 84 days) has shown clear consistency. However, this consistency only exists in the long-term trend, not in daily trading. When we examine daily returns, this “magical 84-day rule” collapses.

The daily correlation between Bitcoin and M2 is only 0.02, and with the US dollar index, it’s 0.04—these numbers are close to zero, meaning that on any given day, changes in M2 supply or the dollar are almost useless for predicting Bitcoin price moves. This is the truth influencers won’t tell you: those seemingly perfect overlay charts describe “overall trends,” not “daily specifics,” because the trend in that series is calculated on a monthly basis.

A lagged test of daily returns reveals two time scales. To avoid spurious fitting, at least 120 overlapping observations are required. Results show that Bitcoin returns are most correlated with liquidity series about six weeks earlier, and least correlated with the US dollar index (DXY) about a month prior. Under these constraints, the best correlations are: when M2 leads by 42 days, the correlation is 0.16; when DXY leads by 33 days, the correlation is -0.20.

In simple terms, liquidity acts like slow gravity and the dollar like an accelerator; only when their impulses persist for weeks do they exert measurable (albeit small) force. This means you can’t use yesterday’s M2 data to predict today’s Bitcoin price—but you can use M2 trends from two months ago to understand current price trends.

Correlation Reversal in Bull and Bear Markets

(Source: Trading View)

Market divergence near Bitcoin’s 2025 peak is critical. Before the October 6 peak, Bitcoin price had a level correlation of 0.89 with M2 supply, 0.87 with leading M2, and -0.58 with the dollar index (DXY). This high correlation is exactly why those overlay charts look so accurate on social media.

However, after the peak before November 20, the liquidity trend reversed, and the correlation between the two M2 series dropped to around -0.49, flipping from positive to negative. The inverse correlation with the dollar remained close to -0.60, relatively stable. This pattern matches what traders observe on the charts: during rallies, the 84-day leading M2 line tracks the price path; during declines, M2 continues to rise while price diverges; the dollar remains under pressure in both phases.

A 180-day rolling correlation panel reveals even more. The index peaked at 0.94 on December 26, 2024, then gradually declined in Q1, approaching zero and hitting a low of -0.16 on September 30, 2025. The November 20 reading was -0.12. This arc is consistent with a bull market: the rally respects M2’s leading edge, but later in the cycle, a stronger dollar and position adjustments narrow the connection.

Key Differences Between Bull and Bear Markets

Bull Phase (until October 6): Bitcoin/M2 correlation 0.89, liquidity dominates trend

Bear Phase (after October 6): Bitcoin/M2 correlation -0.49, relationship completely reverses

Rolling Correlation Peak: 0.94 on December 26, 2024

Rolling Correlation Low: -0.16 on September 30, 2025

This means an effective M2 supply forecasting model during a bull market may completely fail in a bear market. KOLs who only show overlay charts from bull periods deliberately ignore this instability.

The Dual Clock Mechanism of Liquidity and the Dollar

(Source: CryptoSlate)

Bitcoin’s price trend is indeed influenced by these two factors: liquidity and the dollar. However, they rarely appear together. M2 supply acts like slow gravity, driving trends on a multi-month scale; the dollar is a fast accelerator, amplifying or dampening volatility over several weeks.

When M2 and DXY are aligned, the trend is strong and the path smoother. For example, when M2 is growing and the dollar is weakening, Bitcoin usually experiences a multi-month rally. When they conflict, correlations break down, and lagging strategies that worked last quarter fail in the next. This is why the simple formula “M2 rises → Bitcoin rises” appears spot-on in some periods and completely fails in others.

Core numbers in the data reveal the truth: over the entire sample period (203 days), the level correlation between Bitcoin and M2 (with 84-day offset) is 0.78, and with the dollar index is -0.58. But when we look at daily returns, Bitcoin/M2 (same day) correlation is just 0.02, and with the dollar index (same day) is 0.04. The best lagged correlations show M2 leads Bitcoin by 42 days at 0.16, and DXY leads Bitcoin by 33 days at -0.20.

What do these numbers tell us? Liquidity and the dollar do affect Bitcoin prices, but this influence is conditional, lagged, and changes with the market phase. No single variable can “explain” Bitcoin’s price. Influencers who claim to have found the “Bitcoin price formula” either don’t understand statistics or are deliberately misleading their audience.

How to Correctly Interpret the M2-Bitcoin Relationship

In practice, M2 supply can be seen as a slow trend compass, and DXY as the gatekeeper that can block or accelerate trends. When the compass points north and the gate is open, correlation rises. When the compass points north but the gate is closed, the path bends or stalls.

For anyone interested in monitoring these trends, two basic checks cover most of what the sample shows. First, monitor the slope of the liquidity series and the dollar over a rolling one-to-three month period (using returns, not levels), and require both to align before considering the M2 indicator. Second, let the lag float within a range rather than locking it to a single number, since the optimal lead during the 2024 holiday period differs from what works best at the end of 2025.

Both steps can be implemented using rolling correlations of weekly returns and simple lag searches. The core is to build a framework, not just shout slogans. When the dollar is steady or weakening, liquidity drives market turning points and multi-month trends. When the dollar is strong, it often dominates short-term volatility. Over the past year, both states have changed, and so have their correlations.

The results show that Bitcoin’s price is not “explained” by a single variable. Liquidity provides a slow push, which typically produces multi-month rallies when the dollar isn’t rising. When Bitcoin’s own trend is strong, the dollar accelerates volatility as Bitcoin falls or consolidates. Those on social media selling the oversimplified story that “Bitcoin always rises 84 days after M2 rises” ignore the conditional, time-varying, and nonlinear nature of this complex system.