Bitcoin Trails Money Supply Growth as Energy Costs and Rates Bite

Core Insights - Bitcoin is currently trading at a significant discount compared to global liquidity trends, with a 35% decline in its value since mid-2025, while the global M2 money supply has increased by approximately 12% during the same period [1][2] Group 1: Bitcoin Valuation - A model suggests that Bitcoin's "fair value" is around $136,000, contrasting sharply with its current price of approximately $70,000, indicating one of the largest historical gaps between Bitcoin and global liquidity metrics [2] - Historical data indicates that divergences between M2 money supply and Bitcoin prices have typically been temporary, suggesting potential for Bitcoin price recovery [3] Group 2: Monetary Policy Impact - The U.S. Federal Reserve's actions, including reducing its balance sheet from nearly $9 trillion to about $6.7 trillion and maintaining high interest rates, have contributed to tight financial conditions, impacting capital flows into markets [3][4] - The current economic environment has made Bitcoin more sensitive to real interest rates and overall risk sentiment rather than just headline money supply growth [4] Group 3: Energy Prices and Economic Pressure - Rising energy prices, particularly an increase in U.S. gasoline prices by 81 cents since late February, are expected to cost households approximately $740 over the year, which may negate some benefits from anticipated tax refunds [5] - The ongoing conflict with Iran and disruptions in the Strait of Hormuz have led to inflationary risks, with oil prices recently exceeding $100 per barrel before stabilizing around $92 [6] Group 4: Federal Reserve's Stance - The Federal Reserve has opted to keep interest rates steady, reflecting a cautious approach as it navigates the challenges posed by rising energy costs and a cooling labor market [7]