Raoul Pal, founder of Global Macro Investor, has drawn attention to a widely circulated chart that compares bitcoin’s (BTC) movements with global M2 money supply.
The chart shows that since early 2023, bitcoin has tended to track global M2 money supply with a consistent 12-week lag, implying that changes in liquidity conditions filter through to crypto markets with a three-month delay.
Based on that model, bitcoin would still be on track to approach $200,000 by the end of 2025 if the correlation were to hold.
However, since July 16, this relationship has broken down. While global M2 has continued to trend higher, reflecting ongoing monetary expansion globally, bitcoin has stalled, moving sideways through the summer despite its historically tight connection to liquidity.
TGA refill plays spoilsport
Pal argues that the break is not a failure of the model but rather the result of actions by the U.S. Treasury through its Treasury General Account (TGA). The TGA is the government’s operating account at the Federal Reserve, used to receive taxes, bond sale proceeds, and other inflows while also funding federal expenditures.
When the Treasury seeks to rebuild this account by issuing more bonds than needed to cover immediate obligations, it effectively drains liquidity from the system, reducing the pool of capital available to risk assets. According to Pal, since July, the Treasury has issued about $500 billion in bonds to replenish the TGA, pushing its balance near $800 billion, a multi-year high.
This large-scale withdrawal of cash has hit liquidity-sensitive assets like crypto the hardest, explaining bitcoin’s sideways action despite rising M2.
Importantly, Pal believes the TGA is now sufficiently replenished, meaning the liquidity drain is likely over and should fade completely by the end of the month. If that happens, liquidity conditions will normalize, and bitcoin’s braoder rally could resume following its M2-driven trajectory upward.
However, to counter Pal’s argument, it is worth noting that tech stocks and gold have continued to set new all-time highs, suggesting that broader risk appetite remains intact.
While the TGA replenishment may have weighed heavily on crypto, the sharper impact could also reflect heavy selling pressure from long-held coins, which helps explain the deviation between bitcoin and global M2.
Source: https://www.coindesk.com/markets/2025/09/25/u-s-treasury-action-to-blame-for-bitcoin-s-break-from-global-m2-raoul-pal-says
