Bitcoin’s Price Is $66,000 Under Its M2 Fair Value — Is the Liquidity Trade No Longer Functional?

The price of Bitcoin is violating one of its most dependable principles.

Since mid-2025, global M2 has increased by approximately 12%. In contrast, Bitcoin has experienced a decline of about 35% during the same timeframe. This represents a significant divergence, indicating a disruption in the liquidity-driven narrative that characterized the previous cycle.

Two primary factors are contributing to this decoupling. Tight interest rates are diminishing risk appetite, while escalating energy prices are pressuring miner profit margins. Both phenomena are occurring simultaneously.

Key Takeaways:

• Liquidity Gap: Bitcoin is trading nearly 50% below the “fair value” suggested by current global money supply figures.
• Rate Drag: The reduction of the Federal Reserve’s balance sheet is absorbing liquidity that has historically flowed into risk assets.
• Miner Squeeze: Increasing energy costs are compelling miners to liquidate their holdings, resulting in persistent sell pressure.

The $66,000 Disconnect: Why Is Bitcoin Price Lagging Behind M2 Growth?

The liquidity is present. Bitcoin is failing to capture it.

CF Benchmarks estimates the implied fair value at $136,000 based on historical correlations with M2. Bitcoin is currently trading around $70,000, creating a $66,000 discrepancy. This is one of the most significant dislocations ever noted between the asset and its monetary support.

Source: Newhedge

Gabe Selby, Head of Research at CF Benchmarks, notes that these gaps typically close over time. However, this one remains unresolved. M2 continues to grow, while Bitcoin remains stagnant. With each passing month, it becomes less valuable in real terms.

The issue is not liquidity; it is the transmission mechanism.

The Federal Reserve has reduced its balance sheet from nearly $9 trillion to $6.7 trillion. Elevated rates provide investors with a guaranteed return, undermining the rationale for holding a non-yielding asset like Bitcoin. Capital is not incentivized to pursue risk when bonds are offering returns. Consequently, it does not.

Global money supply is irrelevant if the flow is obstructed at the source. The liquidity is available; it simply does not reach the crypto market.

A shift in the Fed’s stance could change that. Until then, Bitcoin is influenced by real rates rather than money supply.

Miner Capitulation and Energy Costs

Miners are facing significant losses.

With rising energy costs, miners are particularly vulnerable. Increased fuel expenses lead to higher production costs, resulting in reduced profit margins, which ultimately means one thing: compelled selling. Miners are unable to retain their holdings and are forced to sell BTC to meet operational costs, creating a continuous cycle of selling.

This results in a steady influx of supply into the market. While the market absorbs this supply, it limits any potential rallies before they can gain momentum. Bitcoin finds itself in a challenging situation, with no substantial inflows due to rates dampening risk appetite, and ongoing outflows driven by persistent mining costs.

The ETF data reflects a similar narrative. US spot ETFs attracted $1.16 billion over seven sessions, but then experienced $129 million in outflows in a single day on Wednesday, leading to an immediate 4% price drop.

Bitcoin (BTC)24h7d30d1yAll time

The market is currently fragile.

Traders are monitoring the $69,000 to $70,000 range as the immediate support level. If this level is breached, the mid-$60,000s could become accessible. A recovery above $72,000 would indicate that the lag in M2 is beginning to resolve.

Liquidity data suggests that a rally is overdue, yet the market dynamics do not align. Until the Fed changes its approach or energy costs decrease, every upward movement will face resistance, and the bulls must validate their position.

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