Since July 2025, Bitcoin’s price has broken from its long-standing link with the global M2 money supply. Raoul Pal ties the split to roughly $500 billion in U.S. Treasury bond sales aimed at lifting the Treasury General Account (TGA) to about $800 billion, a move that pulled cash out of markets and stalled the rally, weighing on institutional buyers, crypto fund managers and broader risk assets. On 25 September 2025, the U.S. 10-year yield rose to 4.16 percent.
Raoul Pal, who heads Real Vision, argues that heavy bond issuance created a short-term liquidity squeeze that severed Bitcoin from an M2 measure that continues to expand. By draining cash into the TGA, the Treasury left less capital for crypto and other risk bets, even as tech shares and gold edged higher, pressuring leverage and flows across risk assets.
He expects the M2 link to re-engage and Bitcoin to regain traction once the TGA refill wraps up late in 2025. The TGA, the government’s day-to-day account at the Federal Reserve, handles tax receipts and federal outflows, so its refill can temporarily siphon liquidity from markets, amplifying sensitivity to moves like the 10-year yield’s climb to 4.16 percent on 25 September 2025.
Liquidity squeeze and the M2 break
Not everyone agrees with Pal’s framework. Analyst “Tomas” warns that a fuller TGA could strengthen the dollar and extend the squeeze, pushing Bitcoin lower. TXMC questions the Global M2 signal itself due to uneven release schedules across countries, while Arthur Hayes counters that a steady TGA and looser Fed policy could reignite a rally.
Liquidity remains a near-term hurdle as ongoing Treasury issuance has drained around $500 billion since July 2025, creating a temporary drag on crypto inflows. With the Treasury General Account aiming for roughly $800 billion, the supply pressure could ease once the refill stabilizes, potentially opening room for stronger capital movement into digital assets.
On the price front, Pal outlines a conditional roadmap that ties Bitcoin’s potential rally to the revival of its correlation with M2 money supply. If that link holds, his projection points to a year-end target of $200,000 per BTC, even as U.S. bond yields — currently at 4.16% on the 10-year note as of September 25, 2025 — continue to shape the broader risk landscape.
Meanwhile, macro volatility highlights the importance of diversification and stricter liquidity controls for crypto-heavy funds. Historically, late-cycle liquidity phases often see altcoins outperform Bitcoin, but investor sentiment and risk appetite remain the decisive drivers in determining whether this rotation gains lasting traction.
The next checkpoint is the expected completion of the TGA refill in late 2025. Whether cash returns to risky assets and Bitcoin’s tie to M2 is restored will shape liquidity flows, portfolio weights and the paper trail regulators follow.
