Crypto investor and macroeconomic expert Raoul Pal has identified the main driver behind Bitcoin’s price surge over the past two years. According to Pal, 89% of Bitcoin’s price movement correlates with the growth of the global money supply (M2).
Pal shared a chart showing that as M2 increased, Bitcoin’s price followed closely, particularly since BTC surpassed $40,000 in 2023. He explained that trillions of dollars printed and injected into the global economy have boosted liquidity, which largely explains Bitcoin’s rally. Pal stated that much of the news and narratives around Bitcoin are noise compared to this fundamental relationship. He also highlighted Bitcoin’s role in debasing the U.S. dollar.
Bitcoin experienced volatility late last week, dropping more than 4% from above $108,000 to around $103,000 amid rising military tensions in the Middle East. It later partially recovered but faced further declines.
Separately, investor Anthony Pompliano described Bitcoin as “the new bonds,” suggesting that recognizing this perspective clarifies its value proposition. This view aligns with discussions about “BitBonds,” a concept mentioned in a recent Forbes article proposing that U.S. Treasury bonds could be partially backed by Bitcoin. Such backing could reduce interest costs by leveraging Bitcoin’s fixed supply of 21 million coins.
The article highlighted a shift in U.S. economic policy under the Trump administration, which designated Bitcoin as a strategic reserve asset through an executive order. The U.S. government reportedly holds nearly 200,000 BTC confiscated from illicit activities, including those linked to the Silk Road marketplace.