Global M2 money supply stands at about $180 trillion in 2025, driving shifts in asset values. Gold prices have climbed 38% year-to-date, reflecting its role as a stabilizer. bitcoin, with 23% gains, consistently hits new highs against M2 each cycle.
Understanding Money Supply Dynamics
Money supply growth, like M2 expansion, erodes fiat value through inflation.
Hard assets counter this by preserving wealth over time.
Gold and bitcoin both respond to these trends but differ in mechanisms.
According to WisdomTree, global money supply could reach $230 trillion by 2030 in a base case.
Gold's Track Record Against Inflation
Gold's supply grows annually at 1.6%, limiting scarcity.
It has underperformed M2 growth since 2011, staying below 2011 peaks relative to money supply.
Central banks buy over 1,000 tonnes yearly, boosting demand amid geopolitical risks.
Its volatility stands at 15.5%, offering stability in uncertain markets.
bitcoin's Fixed Supply Advantage
bitcoin caps at 21 million coins, with halvings cutting new issuance.
This scarcity mirrors gold but enhances it digitally in Web3 environments.
As M2 expands, bitcoin often leads rallies, outperforming gold recently.
Its volatility, at 52.2%, reflects higher beta but maturing trends.
Comparative Performance Insights
Since 2021, gold rose from $1,750 to $2,500, while bitcoin hovered around $59,000.
Yet bitcoin's correlation with M2 growth surpasses gold's in some analyses.
Raoul Pal notes the
Banana Zone
where liquidity boosts crypto cycles.
Fidelity's Jurrien Timmer highlights bitcoin's dual nature as hard money and speculative asset.
Role of Regulation and Adoption
Regulation shapes bitcoin's integration into cefi and defi platforms.
Stricter rules enhance security, fostering adoption in funding and market ecosystems.
Gold faces less tech scrutiny but misses Web3 innovations like NFTs and metaverse applications.
Technology advances bitcoin's usability, drawing institutional funding.
Future Trends and Projections
By 2030, bitcoin may hit $250,000 in base scenarios, outpacing gold's $4,000 per ounce.
Inflationary cases push bitcoin over $500,000, emphasizing scarcity benefits.
market shifts favor digital assets amid uncategorized risks like geopolitical tensions.
Investors weigh these for portfolio diversification.
Money supply trends reveal bitcoin's edge in modern economies. This analysis aids decisions on hedging strategies in evolving markets.
