Bitcoin is trading at a significant discount relative to global liquidity trends, according to new analysis from CF Benchmarks, the index provider owned by Kraken. Global M2 money supply has risen approximately 12% since mid-2025, while Bitcoin has declined roughly 35% over the same period. One model cited in the report, published Thursday, places Bitcoin’s fair value at around $136,000, compared with its current price near $70,000. The divergence represents one of the largest gaps on record between Bitcoin and a metric widely used by analysts as a proxy for global liquidity.
Historically, expansions in money supply have flowed into risk assets, with Bitcoin typically responding more sharply than equities. Gabe Selby, Head of Research at CF Benchmarks, noted that more than a decade of data shows such divergences between M2 and Bitcoin have tended to be temporary. Past cycles suggest Bitcoin tends to close the gap with liquidity trends over a multi-quarter horizon, particularly when the Federal Reserve shifts toward rate cuts or slows balance-sheet reduction. The central question for markets is when that realignment might occur.
Analysts point to U.S. monetary policy as the missing link explaining the current disconnect. The Federal Reserve has reduced its balance sheet to around $6.7 trillion from a peak near $9 trillion in 2022 and continues to maintain elevated interest rates, keeping financial conditions tight even as liquidity expands elsewhere. This environment has constrained capital flows into markets, leaving Bitcoin more closely tied to real rates and broader risk sentiment than to headline money supply growth.
Rising energy prices are adding further pressure to the economic backdrop. Economists estimate that an 81-cent increase in U.S. gasoline prices since late February could cost households roughly $740 over the course of a year, potentially offsetting much of the benefit from larger tax refunds. In January, the White House projected that refunds for Americans would increase by an average of $1,000 compared with previous cycles, citing President Donald Trump‘s Working Families Tax Cuts Act. The net effect on consumer spending power remains uncertain.
Markets have also focused on potential disruptions to the Strait of Hormuz, a critical artery for global oil supply, and the inflationary risks that could follow. Elevated interest rates and higher oil prices, driven in part by the ongoing conflict between the U.S. and Iran, have weighed on markets in recent weeks. Oil briefly topped $100 a barrel on Thursday before retreating to levels near $92. The combination of tight monetary conditions and energy-driven inflation risks dampening discretionary spending and reducing the pool of capital available for higher-risk assets such as cryptocurrencies and growth stocks.
Despite the near-term headwinds, many experts argue that global economic growth could accelerate if financial conditions ease and the conflict in the Middle East is contained, which would represent a significant tailwind for crypto markets. Markets are currently contending with persistent inflation, geopolitical tensions, and monetary tightening, creating uncertainty about the direction of risk assets. Crypto has largely tracked the Nasdaq in this environment, remaining sensitive to the same macro forces affecting equities.
Selby highlighted that structural demand factors not present in prior cycles could play a meaningful role in any trend reversal. He pointed specifically to U.S.-listed spot Bitcoin exchange-traded funds and corporate treasury purchases as vehicles that helped drive Bitcoin to previous all-time highs and could provide direct mechanical support going forward. Ongoing buying from these groups, he added, represents a source of demand that is new to the current cycle and could help accelerate a realignment between Bitcoin’s price and underlying liquidity conditions.
Originally reported by Decrypt.
