Bitcoin is decoupled from the global M2 supply for the first time. According to the founder of Capriole Investments, possible reasons include:
Bitcoin deviates from global M2 supply trend
In a new post on X, Charles Edwards, founder of Capriol Investments, talked about how Bitcoin has recently become disconnected from global liquidity flows. Below is the graph cited by Edwards, which compares the year-on-year (YoY) change in BTC with the change in global M2 supply.
As shown in the graph, while the total money supply of the world’s major countries increases, Bitcoin’s year-on-year change remains flat until 2025, indicating that BTC is departing from traditional liquidity flows.
Historically, year-on-year changes in cryptocurrencies have generally followed a similar trajectory to global M2 supply. “This is the first time Bitcoin has been decoupled from the money supply and global liquidity flows,” the analyst said.
What’s the reason behind this new trend? According to Edwards, this is the threat quantum computing poses to networks. Quantum computers are hypothesized to have the ability to decrypt cryptocurrencies, making early blockchain wallets particularly vulnerable.
Although it is unclear when quantum machines will find a breakthrough, the founders of Capriol believe that BTC will enter the “quantum event horizon” in 2025. “The time frame for a quantum machine to have a non-zero probability of breaking Bitcoin’s encryption is now shorter than the estimated time it would take to upgrade Bitcoin,” Edwards said.
In theory, a party with a sufficiently advanced quantum computer could hack into an old, dormant wallet and dump its coins on the market. This would not only directly impact the price of BTC, but could also undermine widespread confidence in the cryptocurrency itself.
The analyst explained, “Fund allocation has changed in response to this risk.” One X user countered that most investors do not seem to agree with Edwards’ quantum timeline, suggesting that the market is unlikely to be divided based on views that are not widely shared.
“You would think so if you listened to all of Bitcoin Maxis on X,” Edwards responded to the user. “If you talk to actual capital allocators and OGs in the Bitcoin industry who have been private for over seven years, they are all considering this risk.”
In other news, Bitcoin spot exchange-traded funds (ETFs) continue to face weak demand recently, SoSoValue data shows.
From the chart above, we can see that $681 million was exited from the US Bitcoin Spot ETF last week. The new week has started with inflows so far, but it remains to be seen whether the inflows will continue in the coming days.
BTC price
At the time of writing, Bitcoin was hovering around $92,100, up nearly 2% in the past 24 hours.
