Bitcoin (BTC) price and risk assets grow higher with money supply

Historically, there has been a strong correlation between the S&P 500 and the M2 money supply, with both moving in tandem over the past five years. For example, during the pandemic in early 2020, M2 hit a low of $15.2 trillion in February, just before the S&P 500 hit a low of around 2,409 points in March. A similar pattern occurred in October 2023, when monetary policy tightening drove M2 down to $21 trillion. Shortly thereafter, the S&P 500 hit a low of 4,117. This link highlights the critical role of liquidity in driving stock market performance.