T‑Bill Issuance, Not M2, Shows Strongest Correlation with Bitcoin Price
New analysis finds U.S. Treasury T‑bill issuance correlates far more closely with Bitcoin price than traditional liquidity gauges such as M2 money supply or the Fed balance sheet. Analyst Axel Bitblaze reports a +0.80 correlation between short‑term T‑bill issuance and BTC over the past four years, compared with +0.54 for Fed liquidity facilities, +0.26 for a global liquidity index, and essentially zero (‑0.07) for Fed balance sheet changes. Historical patterns show T‑bill issuance peaks aligned with Bitcoin highs (late 2021) and troughs with bear phases (2022 bottom, mid‑2023 recovery), suggesting BTC often lags shifts in short‑term Treasury supply by months. The article argues T‑bill issuance affects short‑term funding flows — moving cash into money market funds and reverse repo — and therefore has a more immediate impact on risk assets than slower measures like M2 or QE data. For traders, the finding implies monitoring Treasury bill supply could provide a more timely macro signal for Bitcoin positioning than conventional monetary aggregates.
Neutral
The article identifies a strong statistical correlation (+0.80) between T‑bill issuance and Bitcoin price, implying that shifts in short‑term Treasury supply materially affect liquidity available to risk assets. For traders this is actionable: rising T‑bill issuance historically preceded increases in BTC (after a lag), while declining issuance has coincided with downward pressure. However, correlation is not proven causation. Other factors (risk sentiment, on‑chain metrics, regulation, macro shocks) still move BTC and can override T‑bill effects. Additionally, the relationship shows lagged behavior, limiting its use for intraday trading but supporting tactical medium‑term positioning and risk allocation decisions. Short term: traders may treat rising T‑bill issuance as a liquidity expansion signal that could support longs after confirmation (watch lag and funding flows into money market funds/repo). Falling issuance could warn of tightening funding conditions and warrant reduced risk or tighter stops. Long term: if the structural link between short‑term Treasury supply and crypto liquidity persists, asset managers and macro traders may increasingly include T‑bill issuance data in models, shifting some predictive power away from M2 or Fed balance‑sheet metrics. Overall impact is neutral because the signal is strong but not singular — it complements, rather than replaces, other on‑chain and macro indicators.