Bitcoin-Money Supply Link Is A Myth, Glassnode Researcher Reveals

Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and publishing How Our News is Made Strict editorial policy that focuses on accuracy, relevance, and impartiality Ad discliamer Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio. A senior researcher at Glassnode has challenged the idea that the Bitcoin price is correlated to US money supply or other major economies. No Structural Link Between Bitcoin & Money Supply Of Major Economies

In a new post on X, Glassnode senior researcher CryptoVizArt.₿ has talked about the Correlation between Bitcoin and the money supplies of theGroup of Seven (G7) economies. The “Correlation” here refers to an indicator that measures how tightly together the prices of two given assets are moving.

When the value of this metric is positive, it means the price of one asset is reacting to movements in the other by moving in the same direction. The closer the indicator is to 1, the stronger the relationship. Related Reading This XRP Signal Consistently Foreshadows Price Jumps: Analytics Firm 3 days ago

On the other hand, the indicator being under the zero mark suggests a negative correlation exists between the prices. That is, they are moving in opposite directions. This behavior is the strongest at -1.

Now, here are the charts shared by the analyst that provide a few representations of the Correlation between Bitcoin and the money supply of each G7 nation over a 90-day rolling window: BTC’s Correlation with the money supplies of the different G7 nations | Source: @CryptoVizArt on X

As is visible in the graphs, the Correlation between Bitcoin and the money supplies of seven of the world’s largest economies has swung wildly over the years. Often, periods of positive values of the metric are succeeded by a phase of negative or neutral levels, with there being no clear macroeconomic triggers behind the shifts.

“Bitcoin’s correlation with US M2 or other major economies’ money supplies demonstrates no consistent or predictive pattern,” notes the Glassnode researcher. A longer-term view through a 180-day rolling window also shows the same. The Correlation between BTC and G7 M2 on a 6-month rolling window | Source: @CryptoVizArt on X

“Despite frequent claims of a stable linkage, the data suggest the relationship is largely stochastic rather than structural,” says CryptoVizArt. While Bitcoin is certainly not independent of the global economy, this pattern would suggest that there is a mix of several other factors that also play a role in driving the coin. Related Reading Dogecoin Is Right Where Past Bull Runs Have Taken Off: Analyst 3 days ago

In an earlier X post, the analyst shared the trend in the 180-day Correlation between Bitcoin and twotraditional assets: Gold and S&P 500. How the relationship between Bitcoin, Gold, and S&P 500 has changed over the past decade | Source: @CryptoVizArt on X

From the topmost chart, it’s visible that Gold and Bitcoin have seen their 180-day Correlation stand at a neutral level most recently, indicating that the two have pretty much been moving independently of each other. Meanwhile, the second graph shows a notable positive value for the metric between S&P 500 and BTC, implying the cryptocurrency has been moving in tandem with stocks to some degree. BTC Price

Bitcoin crossed above $122,000 during the weekend, but it would appear the asset has kicked off Monday with a retrace as its price is back at $119,000. The price of the asset appears to have been climbing in recent days | Source: BTCUSDT on TradingView Featured image from Dall-E, chart from TradingView.com