US Treasury Action to Blame for Bitcoin's Break from Global M2 Trend, Raoul Pal Says
A recent chart circulated by Raoul Pal, founder of Global Macro Investor, has highlighted a significant deviation in the movement of bitcoin (BTC) from its historical correlation with global M2 money supply. According to Pal, this break is largely attributed to the US Treasury's action on the General Account refill.
The chart, which compares BTC movements with global M2 money supply since early 2023, shows that bitcoin has consistently tracked the trend with a 12-week lag. However, in recent times, the correlation has weakened, implying that changes in liquidity conditions are no longer filtering through to crypto markets with the same delay.
Financial Impact:
The deviation from the global M2 trend has resulted in a sharper impact on bitcoin, with significant selling from long-held coins contributing to the break.
According to data, the US Treasury's General Account refill has injected $1.4 trillion into the economy since 2023, which may have weighed heavily on crypto markets.
Market Implications:
The chart has sparked debate among market analysts and investors about the liquidity-driven explanation provided by Pal.
Tech stocks and gold continue to hit new highs, raising questions about the validity of Pal's theory.
Broader risk assets remain resilient at record levels, with many experts attributing this to the ongoing economic recovery.
Stakeholder Perspectives:
Raoul Pal's explanation has been met with skepticism by some market analysts, who argue that other factors may be contributing to the break from the global M2 trend.
Investors are closely watching the situation, as a continued deviation from the trend could have significant implications for crypto markets.
The US Treasury's action on the General Account refill is being closely monitored, as it has the potential to impact economic growth and inflation.
Future Outlook:
As the correlation between BTC and global M2 money supply continues to weaken, investors are left wondering what this means for the future of crypto markets.
Pal's theory suggests that changes in liquidity conditions may no longer be filtering through to crypto markets with the same delay, which could have significant implications for market participants.
The situation is being closely monitored by regulators and market analysts, who will be watching for any further developments.
In conclusion, Raoul Pal's chart has highlighted a significant deviation in the movement of bitcoin from its historical correlation with global M2 money supply. While the US Treasury's action on the General Account refill may be contributing to this break, other factors are also at play. As investors and market analysts continue to monitor the situation, one thing is clear: the future of crypto markets remains uncertain.
*Financial data compiled from Coindesk reporting.*
