Recently, the global M2 money supply has increased by approximately 12%, while Bitcoin's price has experienced a decline of up to 35% during the same period. Historically, Bitcoin's price movements have typically aligned with the growth of the broad money supply, but this pattern seems to be breaking down, drawing widespread attention to the cryptocurrency's weak performance.
According to research from CF Benchmarks, the 'fair value' of Bitcoin, calculated based on its historical correlation with M2 money supply, should be around $136,000. However, the current market price hovers around $70,000, marking a record maximum gap between calculated value and trading price. Gabe Selby, the head of the research team, pointed out that similar price discrepancies in the past have usually narrowed over time, but this time it appears to be widening.
High Interest Rates and Energy Costs Disrupt Bitcoin Market Dynamics
Experts believe that the growing disconnect between Bitcoin and market liquidity is primarily driven by two factors: rising interest rates and continuously increasing energy costs.
Soaring interest rates have significantly suppressed investors' risk appetite, leading them to prefer allocating funds to safer assets like government bonds with attractive yields. As an asset commonly classified as high-risk, Bitcoin's demand has consequently dropped sharply.
At the same time, rising energy prices have placed a heavy burden on cryptocurrency miners. Electricity costs are a major component of miners' operational expenses, and as energy prices climb, mining profitability is squeezed. To cope with the increasing costs, many miners are forced to sell their held Bitcoin, adding new selling pressure to the market.
“Miners are facing a dilemma. The surge in energy costs has the most direct impact on them. Higher fuel bills mean higher production costs, which compress profit margins, ultimately leading to forced sell-offs.”
To maintain operations, mining companies have no choice but to liquidate assets. This ongoing selling behavior constitutes structural pressure on the market, suppressing the upward momentum of cryptocurrencies in recent months.
Similar volatility has also been observed in the Bitcoin spot ETF market listed in the U.S. Over the past seven trading days, despite total inflows reaching $1.16 billion, one trading day saw an outflow of $129 million, with Bitcoin's price dropping by 4% on that day. This volatility highlights the current market's sensitivity to changes in capital flows and macroeconomic sentiment.
Analysts point out that in the short term, the $69,000 to $70,000 range constitutes a key support level for Bitcoin. If the price falls below this level, it may face the risk of retreating to $60,000. On the upside, if it can successfully break through $72,000, it may signal a narrowing gap between money supply growth and Bitcoin valuation, bringing a glimmer of hope for Bitcoin to recover lost ground.