Here’s how bitcoin and S&P 500 look like when adjusted for the money printer

If you’re only looking at the dollar price of your portfolio, you may be missing part of the picture, which is significantly shaped by money supply growth.

To the casual observer, the markets look like business as usual. While bitcoin has nearly halved to $66,000 since its $126,000 peak in October of last year, the decline could be dismissed as just another brutal, quadrennial crypto bear market. Meanwhile, the S&P 500 continues to hover near record highs.

But beneath the surface, a more interesting signal emerges when both prices are adjusted for the U.S. M2 money supply. M2 is the Federal Reserve’s estimate of liquid assets, including cash on hand, money deposited in checking and savings accounts, and other short-term saving vehicles such as money market funds and certificates of deposit.

Monetary exhaustion?

Some observers see bitcoin as a high-beta barometer for dollar liquidity, and the BTC/M2 ratio, bitcoin’s price adjusted for money supply growth, is now flashing a warning. The ratio, after a sharp climb from 2023 through 2025, appears to have formed what technical analysts call a head-and-shoulders pattern, typically read as a bearish signal.

If the pattern holds, it would suggest bitcoin’s exponential edge over money supply growth — the dynamic that let it outrun debasement so convincingly in prior cycles — is fading. Bitcoin’s ability to outpace the flood of new dollars may be approaching diminishing returns, at least for now.