Bitcoin [BTC] Ranking w.r.t. M2 Money Supply of Countries and US Vs. China

Bitcoin [BTC] Ranking w.r.t. M2 Money Supply of Countries and US Vs. China

Recently, the US Govt. and the Fed has been strongly criticized because of the significant injection of US Dollars. The total assets under the Fed have risen 66.7% (2.77 trillion dollars) since the COVID-19 crash in the markets. It essentially marks the purchases of debt and government bonds to flood the economy with newly printed dollars.

us federal reserve balance sheet
U.S. Fed Balance Sheet (Source)

The IMF and the European Central Banks have been proposing similar measures to battle the outbreak of the deadly virus. Therefore, investors recommend Bitcoin to hedge against the impending inflation in the global economy. Moreover, the problem of rising national debt and decreased output is consistent across all major economies of the world.

China and US Factor

A look at China’s quantitative easing in the last 10 years puts this into a better perspective. Since 2009, the M2 – money supply in China has grown by around $21 trillion. Whereas, in the U.S. this number has increased nearly $10 trillion since the last recession in 2008.

us m2 money supply
M2 Money Supply in the US (Source)

The M2 Money supply of China is over $12 trillion more than that of the US Dollars.

Money Supply is the total amount of ‘money’ in the global economy at a given point in time. While M1 supply accounts for the savings accounts and checking deposits, M2 includes what is called as ‘near money’. It extends to mutual funds, savings deposits, marketable securities, and other financial instruments.

M2 Money Supply of Top Nations (Source: Tradingeconomics)

The limited supply and digital security offered by Bitcoin is uncorrelated to any other traditional asset in the market. Fundamentally, the closest relevance it has is with gold which is scarce and has a comparable rate of expansion (around 1.8% annually) at the moment as well.

Bitcoin and the World Economy

In one of his earlier twitter posts, on-chain analyst and investor, Willy Woo, marked Bitcoin’s market capitalization compared to the GDP of individual countries. He points out that the economics of Bitcoin is getting stronger than most emerging countries, he notes,

If we are talking emerging countries, totally yes. Bitcoin is already the size of an emerging country. Its marketcap at $170b is already that of the 53rd country by GDP

Nevertheless, there is a discrepancy here; while the GDP is a yearly metrics, we are comparing the total market capitalization of Bitcoin. Even Woo pointed out the apt comparison would be with the M2 money supply.

M2 Money Supply of Countries

Presently, Bitcoin with around $170 billion Mcap stands at number 40 in the list of countries w.r.t. the M2 money supply alongside South Africa and Qatar. Some of the countries comparable to Bitcoin are,

One of the prominent traders in the space, Tyler D. Coates, tweeted on the advantages of the increase in market capitalization when it comes to attributes of being sound money. He tweeted,

volatility decreases as market cap grows. If $BTC becomes less volatile than currencies with similar market caps then it is becoming a currency

This research is co-authored by Vishal Singh, a data scientist from Colombia University.

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Hello, I am an Electrical Engineer currently pursuing Actuarial studies. I work as an analyst reporter for CoinGape. Here to share my knowledge and observation of the crypto space. Feel free to contact!

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