Why Analyst Ben Cowen Says M2 Money Supply Bulls Have It Wrong

TLDR

• Analyst predicts global M2 money supply will top within months and decline as the dollar strengthens
• Bitcoin historically peaks before M2 money supply, with last cycle showing BTC bottoming after M2 topped
• US interest rates remain above 2-year yields, indicating restrictive monetary policy with no immediate rate cuts expected
• Job market shows weakness with low hires, openings, and quits while unemployment typically rises into summer
• S&P 500 near all-time highs limits Federal Reserve’s ability to provide liquidity for crypto markets

A crypto market analyst has pushed back against the bullish macro narrative. The analyst argues that multiple economic indicators point to a different conclusion than many “macro guys” are promoting.

The analyst challenges the widespread belief that global M2 money supply will expand from current levels. Instead, they predict M2 will peak within a few months and begin declining. This view ties directly to expectations for dollar strength.

The relationship between Bitcoin and M2 serves as a key historical reference point. Bitcoin has consistently topped before M2 money supply in previous cycles. During the last market cycle, Bitcoin actually bottomed shortly after M2 reached its peak.

US interest rates currently sit above the 2-year Treasury yield. The analyst uses this yield as an approximation for the neutral rate. This positioning suggests monetary policy remains restrictive despite recent market optimism.

Interest Rates and Employment Concerns

The absence of immediate rate cuts presents another challenge for bullish forecasts. Current rate positioning does not indicate any near-term Federal Reserve easing. This contradicts expectations that easier money will flow into crypto markets soon.

The labor market shows signs of weakness across multiple metrics. Hires, job openings, and quits all register at low levels. The unemployment rate historically tends to rise heading into summer months.

The S&P 500 trading near record highs creates a specific policy constraint. The Federal Reserve faces difficulty providing additional liquidity when equity markets perform well. This dynamic limits the monetary support that crypto markets would need for a major rally.

The analyst addresses the narrative around quantitative tightening ending. They point to 2019 as a historical parallel when QT ended but Bitcoin continued falling. The end of balance sheet reduction alone does not guarantee crypto price appreciation.

Competing Macro Interpretations

The complexity of macro analysis allows for different interpretations of the same data. The analyst emphasizes that disagreement does not equal ignorance of economic indicators. Multiple professionals can examine identical data sets and reach opposite conclusions.

The analyst criticizes those who claim bearish views ignore macro factors. They argue this represents gaslighting from analysts who maintain bullish positions. These bulls must defend their stance after missing the Q4 market top.

Had these analysts correctly called the top in Q4, their macro interpretation would likely differ. They would feel justified in presenting bearish macro analysis. Instead, they attack those with contrasting views to maintain their narrative.

The charge that bearish analysts ignore macro data lacks merit according to this perspective. The analyst suggests bulls calling for alt season over the past four to five years actually ignored macro realities. Bull markets make many analysts appear correct regardless of their actual methodology.

The analyst maintains their interpretation of current conditions based on comprehensive macro review. Dollar strength, restrictive rates, weak employment metrics, and high equity valuations all factor into their bearish outlook. Historical patterns between Bitcoin and M2 money supply provide additional context for timing expectations.

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