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- 🤔 Will Bitcoin Follow the M2 Money Supply?
🤔 Will Bitcoin Follow the M2 Money Supply?
& breaking down market returns after major sell-offs.
Austin & Robert from Rich Habits
March 13, 2025
Together with Public
Good morning,
A quick breakdown — in case you don’t have the time.
⭐ We’re hosting another free webinar next week — click to sign up!
⭐ The S&P 500 is up +1,060% since the 2009 bear market.
⭐ We shared our volatility playbook for 2025.
⭐ Bitcoin’s price correlates closely with the Global M2 Money Supply.
⭐ We should expect more volatility from the Nasdaq-100.
Market Overview
As of market open, 3/13/2025
Chart of the Week
The S&P 500 is up +1,060% since the 2009 bear market.
As we enter what is shaping up to be a very volatile year, with the Nasdaq down -12% from recent all-time highs and the S&P 500 down -8% from recent all-time highs, we want to remind everyone the importance of zooming out.
“When in doubt, zoom out.”
We say this phrase often, and in a bull market (like we’ve seen since the beginning of 2023) it doesn’t exactly seem that important. Sure, select single stocks might experience some turbulence because of a bad earnings call — but, in aggregate, things trend up and to the right during bull markets.
As we now have both the S&P 500 and the Nasdaq-100 trading below their respective 200-day moving averages, this phrase becomes much more important. We’ve been getting DMs and emails on a daily basis of people asking “Do I sell my stocks? What should I do?”
Assuming you’re a long-term investor like us (as defined as someone with 5-10+ years of investing ahead of them), stick to your plan of dollar cost averaging. Both the S&P 500 and the Nasdaq-100 are trading below their 200-day moving averages, which means the markets will unfortunately continue to be volatile.
But with that being said, it’s never been more important to have a plan — and stick to it!
We can’t predict the future. However, we believe the markets are over-sold in the short-term and we should hopefully begin to experience some relief during the back-half of March as we head into Q2.
It feels weird buying blue chip stocks and ETFs when they’re down -10%, -15%, or even -35% (we’re talking about you, Tesla). So think about it like this… fast forward 5-10 years when all of these blue chip stocks and ETFs are trading multiples higher than they are now.
Are you going to be upset with yourself because of analysis paralysis, or are you going to be grateful you stuck to your plan of dollar cost averaging?
We have a feeling you’ll be happy you continued to stick to your plan and was a net-buyer of assets.
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In Case You Missed It…
In this week’s Monday-morning episode of the Rich Habits Podcast (linked here) — Robert and Austin sat down with NEOS Investments Managing Partner, Garrett Paolella, to discuss volatility in the markets.
Here’s what they talked about:
The Psychology of Investing — everyone’s favorite phrase is “buy low, sell high” until it’s actually time to buy low and sell high. The be a successful investor, you need to take emotion out of the equation. People get excited when they’re given a discount at the grocery store or at the mall, but fearful when given a discount at the stock market. Have a plan and stick to it!
QQQH — NEOS recently renamed their “NUSI” ETF to “QQQH,” with the “H” standing for “hedge.” This ETF has actually been around since 2019 and even outperformed the Nadaq-100 in 2024. By implementing both a covered call and put option strategy, this ETF generates monthly income for investors while hedging against downside risk. Year-to-date, QQQH has outperformed QQQ by +3.3%.
Portfolio Construction — when it comes to building an investment portfolio from scratch, we believe the “Core / Satellite” strategy is the best. The “Core” section of your portfolio makes up a 65-85% weighting and is comprised of blue chip index funds and ETFs. The “Satellite” section of your portfolio makes up the 15-35% difference and is comprised of blue chip single stocks, safe havens like Gold and Silver, cryptocurrencies like Bitcoin, real estate, and other ways to diversify. Having a well-diversified portfolio allows you to weather the storm just a little bit better!
Tune into the episode (linked here) to see / hear the full breakdown — and make sure to check out the NEOS website for more resources as well.
They also just launched The Monthly Income Podcast! Here’s a link to the YouTube where you can subscribe.
Here’s a link to the Q&A episode that was posted this morning.
We answered questions from: Zac S, Rian S, Erik G, Jake H, Tina W, Matt H, and Lisa B.
You can submit questions for these episodes by asking them inside of the Rich Habits Network, replying to this email, or sending us a DM on Instagram.
The Rich Habits Podcast is available on Spotify, Apple, iHeart, YouTube, and wherever else you get your content!
Robert’s Callout
Bitcoin’s price correlates closely with the Global M2 Money Supply.
Let me be very clear, correlation does not equal causation. With that being said, the long-term correlation between the price of Bitcoin and the Global M2 Money Supply is simply fascinating.
Just so we’re all on the same page, the Global M2 Money Supply is defined as the amount of 1) Physical currency (coins and notes) in circulation plus demand deposits (like checking accounts), and 2) Savings accounts, money market mutual funds, and small-denomination time deposits.
The Global M2 Money Supply — cash, checking deposits, savings, and other liquid assets across major economies — reflects liquidity in the financial system. When it expands, more money tends to flow into risk assets like Bitcoin, often with a lag.
Studies suggest Bitcoin’s price has a correlation coefficient of around 0.94 with the Global M2 Money Supply over extended periods (2013–2024). This means when M2 grows, Bitcoin’s price tends to follow, with 94% of its variance potentially explained by M2 trends.
However, the price response isn’t instant. Analysts cite lags of 45–107 days, with 70 days being a common average. This delay reflects the time it takes for liquidity to filter into speculative markets.
Considering the Global M2 Money Supply is trending higher as we speak, I’m optimistic the price of Bitcoin (and the total market capitalization of cryptocurrency in general) will trend higher in the coming weeks and months as well.
Austin’s Callout
We should expect more volatility from the Nasdaq-100.
Historically speaking, every time the Nasdaq-100 has closed below the 200-day moving average and then falls another -3.5% within two weeks, we see a negative 1-year return. Unfortunately, this has already happened for the Nasdaq-100.
What does this mean?
Well, on the surface, expect more volatility this year. We very well could end the year in the red. With that being said, it doesn’t mean to “run for the hills” or “sell everything and panic.” Instead, we encourage you to have a plan.
For us, that means knowing the specific blue chip single stocks and ETFs we want to buy at a discount. The below chart illustrates just how important it is to take advantage of these market sell-offs for long-term gains.
Just look at those 5-year returns!
After the 2009 sell-off, the markets rebounded +177%
After the 2016 sell-off, the markets rebounded +114%
After the 2018 sell-off, the markets rebounded +59%
After the 2nd 2018 sell-off, the markets rebounded +102%
After the 2020 sell-off, the markets rebounded +150%
The most important thing you can do during a deep market sell-off, if we experience one in 2025 or 2026, is to take advantage of it.
The above chart illustrates the returns of the blue chip indices we talk about, like the S&P 500 and the Nasdaq-100. Just imagine what the returns were for blue chip single stocks!
The Rich Habits Radar
👉 Trump tariffs roll on — steel / aluminum penalties hit Canada and Mexico.
👉 Inflation cooled in Feb — bringing some slight relief to the markets.
👉 'Mag 7' tech stocks have lost -$3 trillion of market cap since January highs.
👉 Intel appointed Lip-Bu Tan as CEO — leading to a +12% stock surge.
👉 Gold climbed to a record $2,947/oz as the flight to safety intensifies.
👉 Global equities continue shifting — with non-U.S. stocks outperforming.
👉 Airline profits hit turbulence from Q1’s ‘parade of horribles’.
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