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The M2 money supply, in economic terms the velocity of money, indicates how often a dollar is spent within a specific period. The more frequently money circulates, the stronger the economy feels. When velocity declines, people tend to hold onto their cash. According to economists, there is little to no chance of this velocity rising sharply again soon. This could spell trouble for Bitcoin’s price, particularly in the short term.
When the Bell Curve Peaks: Why M2 Velocity Has a 0% Chance of Spiking Back Up
M2 velocity measures how often each dollar actually moves through the economy. When velocity rises, people feel secure enough to spend. When it falls, they sit on cash. And across the last sixty years,… pic.twitter.com/YIVtStkYcI
— EndGame Macro (@onechancefreedm) November 27, 2025
What the Velocity Exactly Shows #
For sixty years, M2 velocity has moved in recognizable wave patterns. During growth periods, velocity rises. As the economy weakens, the curve tilts downward. These movements almost always coincide with:
- higher interest rates,
- falling demand,
- or a recession.
Before 2000, velocity typically rose. After the 2008 financial crisis, this shifted. Massive asset purchase programs and excess liquidity caused the money supply to grow faster than the economy, leading to a structural decline in velocity.
The Corona Shock and the Short Recovery #
During the COVID-19 pandemic, velocity hit a historic low: people received support but spent less. The subsequent recovery was largely mechanical, driven by economic reopenings, rising inflation, and growth while the money supply stabilized.
That recovery stalled in 2023–2024. Velocity remains stuck around 1.3, well below pre-2008 levels (1.5–1.8). Economists interpret this stagnation as telling: households have largely depleted their savings, and businesses have used buffers to absorb cost increases.
Why a New Peak Is Virtually Excluded #
History shows a clear pattern: once velocity forms a rounded top, it rolls downward and never returns to a new high. This occurred in:
- the early 1970s,
- mid-1980s,
- early 1990s,
- and around the dot-com era.
Small recoveries happened, but never new peaks. The strongest jump ever, post-COVID, still didn’t restore velocity to old levels. Based on historical patterns, the chance of a genuine new peak is practically 0%.
Impact on Bitcoin’s Price #
For Bitcoin, global liquidity trends are critical. Stagnant money velocity means scarce liquidity, typically leading to higher volatility and downward pressure on risk assets.
Short term:
- Less money circulating = less capital for investments.
- Bitcoin may face temporary pressure.
Longer term: If the Fed eases policy due to economic weakness (as in past cycles), liquidity rises again. Historically, this often marked periods of strong Bitcoin recovery. In other words, M2 velocity signals that the liquidity wind is unfavorable for now. But when new policies emerge, that wind often shifts in Bitcoin’s favor.