XWIN Japan
Money Supply Expansion and Declining Purchasing Power — The Fundamental Value of Bitcoin
・U.S. money supply has reached an all-time high, signaling a renewed expansion in liquidity ・Growth in money supply and declining purchasing power suggest structural inflation ・Bitcoin expands in value through both liquidity and network growth over the long term The U.S. money supply has surpassed $22.6 trillion, reaching a new all-time high. This is not just a statistical update, but a signal that the underlying condition of the market—global liquidity—is shifting again. Money supply represents the total amount of usable capital in the economy and has historically shown strong correlation with asset prices, especially risk assets. Since the 2008 financial crisis, money supply has nearly tripled, while the purchasing power of the dollar has declined by about 38%. This reflects a structural reality: as supply increases, the value of each unit decreases, manifesting as inflation. The chart highlights this dynamic clearly. Bitcoin’s behavior within this context reveals a deeper structure. As liquidity expands, Bitcoin price trends upward over the long term, acting as a sink for excess capital. At the same time, active addresses indicate network usage, showing that Bitcoin is not just a financial asset but a growing network. However, liquidity expansion carries risks. Much of the recent growth is driven by government debt rather than organic credit creation, raising concerns about sustainability and inflation resurgence. Ultimately, Bitcoin stands out as both a hedge against monetary debasement and a network-driven asset. Its long-term value is shaped by the combination of liquidity, price, and network growth, making it essential to analyze all three together.