Forget M2: Treasury T-Bill Issuance Emerges as Bitcoin’s Strongest Macro Signal

Bitcoin closely tracks shifts in U.S. T-bill issuance, more than M2 or Fed balance sheet changes.

For years, crypto investors relied on M2 money supply and Federal Reserve balance sheet data to predict Bitcoin’s direction. Liquidity expansion often aligned with rallies, while tightening cycles were linked to sell-offs. That framework shaped much of Bitcoin’s macro analysis. Fresh data now points to a different driver.

Bitcoin Tracks T-Bill Issuance With +0.80 Correlation, Outpacing M2 and QE

As noted by analyst Axel Bitblaze, U.S. Treasury T-bill issuance has had a stronger relationship with Bitcoin than traditional liquidity measures. Over the past four years, U.S. Treasury T-bill issuance has shown the strongest link to Bitcoin’s price. Data shows a +0.80 correlation.

In comparison, Fed liquidity facilities recorded +0.54, while the global liquidity index came in at +0.26. Fed balance sheet activity, including QE and QT, showed almost no relationship at -0.07. A number close to zero signals little connection. 

BTC rallied strongly in 2023 and 2024 even as the Fed reduced its balance sheet. That suggests quantitative tightening was not the main force behind price action. T-bill issuance, however, moved much more closely with Bitcoin over the same period.

In late 2021, T-bill issuance peaked around the same time Bitcoin reached its all-time high. Issuance then declined throughout 2022. Several months later,  BTC entered a deep bear market.

Mid-2023 marked a bottom in issuance, which aligned with the start of the OG coin’s recovery. Issuance rose during 2024 and 2025, and Bitcoin followed with another rally after a delay. Late 2024 showed another peak in issuance. 

By early 2026, issuance began to decline again, while Bitcoin showed renewed weakness. The repeated pattern suggests that Bitcoin often lags changes in short-term Treasury supply.

Treasury Issuance Signals Growing Influence on Crypto Markets

T-bill issuance has a more direct impact on market liquidity than broader money measures. When the Treasury increases short-term bill supply, capital often moves into money market funds.

Cash also shifts through the reverse repo facility, changing short-term funding conditions. Risk assets, including Bitcoin, tend to respond to changes in liquidity.

M2 moves more slowly and reflects overall money supply, not short-term funding stress. Fed balance sheet data tracks asset purchases and roll-offs, but it does not always capture fast liquidity shifts. 

In several periods, M2 remained flat or even increased while Bitcoin struggled. A similar disconnect appeared between QE cycles and Bitcoin’s price action.

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