Influencers on X love pointing to rising M2 charts or a softening dollar as proof that Bitcoin is about to blast off.
Those overlays make for great engagement, but they flatten a far more complex relationship. They matter, but not in the simple, linear way they’re often sold.
Money printing, which increases the global M2 money supply, is said to lead Bitcoin price movements by about 12 weeks. The thinking is that once more liquidity enters circulation, it takes a little while to find its way into Bitcoin.
I identified that the closest correlation is actually over 84 days. Thus, the chart below uses that window as a basis for my analysis.
Liquidity and the dollar – 2 clocks, 1 alarm
Bitcoin does move on those two clocks: liquidity and the dollar. However, they rarely strike together.
I compiled daily price data over the last 12 months to map interactions among Bitcoin, global M2 supply (shifted forward by 84 days), and the DXY dollar index.
The picture, however, does not align with a single rule.
Liquidity aligns with price at slow turns, the dollar exerts quicker pressure, and the connection between all three strengthens or dissolves with the market regime.
The full-period level relationships are clear. Bitcoin’s price co-moves with the liquidity gauges and moves in the opposite direction of the dollar.
Across 203 trading days, the correlation between Bitcoin and M2 (shifted back by 84 days) is 0.78 and 0.77 for the 84-day-forward version (showing price into the future), while Bitcoin versus DXY is −0.58. M2 and DXY are themselves inversely related at −0.71.
These figures describe the backdrop, not day-to-day action, because the series trends over months. On the daily tape, they barely line up at all.
Using log returns rather than levels, same-day correlation is 0.02 for Bitcoin versus M2 and 0.04 for Bitcoin versus DXY, which means the common maxim, dollar up and Bitcoin down, is not a one-day phenomenon in this window. The timing lives in the lags.
A lag test on daily returns shows two time scales. With a minimum of 120 overlapping observations to avoid spurious fits, Bitcoin returns are most correlated with prior moves in the liquidity series about six weeks earlier, and most inversely correlated with prior moves in DXY about one month earlier.
The best values inside these constraints are a correlation of 0.16 when M2 leads by 42 days and −0.20 when DXY leads by 33 days.
In plain terms, liquidity acts like slow gravity, the dollar acts like a throttle, and both push through with measurable, if modest, strength only once their impulses persist for weeks.
Bull run vs bear market relationship
The regime split around Bitcoin’s 2025 high is decisive. Before the Oct. 6 peak, Bitcoin’s level correlation with M2 is 0.89 and with the forward-shifted M2 is 0.87, while the correlation with DXY is −0.58.
In the post-peak slice through Nov. 20, the sign flips for liquidity, with correlations around −0.49 for both M2 series, while the inverse link to the dollar remains near −0.60. That pattern matches the visual overlay traders watch on charts.
During the move up, the 84-day-forward M2 line tracks the price path.
During the downswing, M2 keeps grinding higher while the price diverges.
The dollar’s pressure persists across both phases.
I also crafted a 180-day rolling correlation panel, defined as Bitcoin versus an 84-day-lagged M2, which captures the same turnover in a single line.
It tops at 0.94 on Dec. 26, 2024, then fades through the first quarter, crosses near zero, and prints a low of −0.16 on Sept. 30, 2025.
The reading on Nov. 20 is −0.12. That arc is consistent with a bull leg that respects the M2 lead, followed by a late-cycle period in which a firmer dollar and positioning compress the link.
The result is not that one variable “explains” Bitcoin. The data says the relationships are conditional and time-varying.
Liquidity adds the slow impulse that often frames multi-month advances when the dollar is not rising, which is why the forward-shifted overlay looks accurate around turns.
The dollar adds the faster impulse that tracks Bitcoin’s drawdowns and hesitations when its own trend is firm.
When M2 and DXY align, the tendency is strong and the path is smoother.
When they conflict, correlation collapses, and the lag that worked in one season fails in the next.
M2 Liquidity causes a slow, multi-month lift — but only when the dollar isn’t rising.
Dollar strength causes fast pressure on Bitcoin — it cools rallies and deepens pullbacks.
So, in simple terms, this means:
To keep the emphasis on timing rather than narrative, the core numbers from the data are below.
| Measure | Series | Window | Value | Notes |
|---|---|---|---|---|
| Level corr | BTC vs M2 (84d Shifted) | Full sample | 0.78 | 203 days |
| Level corr | BTC vs M2 (84d forward) | Forward sample | 0.77 | 203 days |
| Level corr | BTC vs DXY | Full sample | −0.58 | 203 days |
| Return corr | BTC vs M2 (same day) | Full sample | 0.02 | 162 days |
| Return corr | BTC vs DXY (same day) | Full sample | 0.04 | 162 days |
| Best lag corr | M2 leads BTC | Lag 42 days | 0.16 | n = 120 |
| Best lag corr | DXY leads BTC | Lag 33 days | −0.20 | n = 129 |
| Pre-peak level corr | BTC vs M2 (84d Shifted) | Through Oct. 6 | 0.89 | advance |
| Post-peak level corr | BTC vs M2 (84d Shifted) | After Oct. 6 | −0.49 | drawdown slice |
| Rolling corr panel | BTC vs M2 (84d Shifted) | Max value | 0.94 | Dec. 26, 2024 |
| Rolling corr panel | BTC vs M2 (84d Shifted) | Min value | −0.16 | Sept. 30, 2025 |
| Rolling corr panel | BTC vs M2 (84d Shifted) | Latest | −0.12 | Nov. 20, 2025 |
These numbers line up with what chart readers infer by eye, with one refinement: the optimal lag is not fixed.
My 84-day choice performs well during the upswing, and it degrades in late 2025 as the dollar strengthens.
In the return data for this sample, the strongest M2 relationship is nearer six weeks, while the dollar relationship is around 1 month. The forward overlay still adds value as a directional anchor, yet the lag is elastic.
How to interpret the data
A practical view is to treat M2 as the slow trend compass and DXY as the gatekeeper that can block or accelerate the path.
When the compass points north and the gate is open, correlation rises.
When the compass points north and the gate closes, the track bends or stalls.
For anyone keen to monitor these trends, two elementary checks cover most of what the sample shows.
- Monitor the slope of the liquidity series and the slope of the dollar over rolling one to three months, in returns rather than levels, then require alignment before leaning on the M2 overlay.
- Let the lag float within a band rather than locking it to a single number, since the lead that dominated around the 2024 holiday period is not the same as the one that best fits late 2025.
Both steps can be implemented with rolling correlations on weekly returns and a simple lag search.
The bottom line is a framework rather than a slogan.
Liquidity dominates turns and multi-month trends when the dollar is calm-to-weaker.
The dollar tends to dominate near-term swings when it trends higher.
The past year delivered both states, and the correlations moved with them.