The initial six weeks of US President Donald Trump’s second term have had a significant impact on cryptocurrency markets, acting like a wrecking ball.
After reaching an all-time high of over $109,000 on Inauguration Day, Bitcoin (BTC) plummeted to a low of approximately $78,000 by late February. It briefly bounced back to $96,000 shortly thereafter, fueled by Trump’s plans regarding crypto reserves. However, those gains were quickly erased within a day, with some blaming the reversal on potential market manipulation.
Although the markets have experienced short-term fluctuations, Bitcoin’s future trajectory is better examined through the perspectives of the business cycle and global liquidity. As of February, both of these key indicators are on an upward trend.
Related: MSTR stock surges 15% following Bitcoin’s weekend rally
Source: Peter Schiff
Insights from the PMI on Bitcoin
For over 70 years, the Institute for Supply Management’s (ISM) Purchasing Managers Index (PMI) has served as a crucial tool for gauging the health of the US economy. Monthly, ISM publishes both manufacturing and non-manufacturing PMIs to assess the conditions in goods-producing and service-providing sectors.
Economists tend to focus more on the manufacturing PMI since it is considered a leading indicator of overall economic health and is more responsive to changes in demand.
The PMI data is derived from both quantitative and qualitative evaluations of the economy as perceived by purchasing managers, or industry executives.
This survey reflects their views on overall business conditions, new orders, export demand, inventories, work backlogs, and employment trends, producing a single index that ranges from 0 to 100, with 50 serving as the threshold between expansion and contraction.
After 26 consecutive months of contraction, ISM’s manufacturing PMI rose above 50 in January and stayed above that important level for a second month in February.
While demand continues to be relatively sluggish overall, with numerous panelists experiencing “the first operational shock of the new administration’s tariff policy,” the change in the PMI trend holds significance in the broader business cycle context.
The manufacturing PMI has surpassed 50 for two consecutive months. Source: Trading Economics
“ISM typically leads the economy by about a month,” noted Real Vision founder Raoul Pal. “But it extends beyond just the economy—it impacts every asset.”
Pal’s insights are echoed by research from S&P Global Market Intelligence, which observed that PMI data had predicted “every turning point in earnings over the past 14 years.” S&P Global established a 74% correlation between its PMI-based earnings indicator and the earnings of US firms.
This correlation extends beyond stocks; it includes virtually all risk assets, Bitcoin being one of them.
“Strong economic growth, robust corporate earnings, and a low probability of recession permit investors to move further along the risk curve,” explains macro analyst TomasOnMarkets.
Viewing Bitcoin through the PMI lens clarifies much of the confusion surrounding BTC’s abbreviated cycle in 2021, which lacked the expected blow-off top that many industry veterans anticipated. In 2021, Bitcoin’s price peaked alongside the business cycle.
Bitcoin shows a strong correlation with the ISM manufacturing PMI. Source: TomasOnMarkets
With the business cycle now on an upward trend, Pal predicts Bitcoin will reach a peak by late 2025 or early 2026. This peak is expected to align with the top of the ISM business cycle, which historically falls within the high 50s to low 60s.
Related: Is the ‘Trump effect’ on crypto merely a temporary phenomenon?
Global M2: Another Catalyst for Bitcoin
The shift in the business cycle is also being affected by an increasing M2 money supply, which reflects a broad measure of the money in circulation within the economy. Research from Real Vision indicates that it typically takes about 10 weeks for Bitcoin’s price to adjust to changes in global M2.
The global M2 money supply has sharply increased in 2025, suggesting Bitcoin will follow this trend. Source: Raoul Pal
Analyst Colin Talks Crypto has charted 46-day and 72-day shifts in global M2 affecting Bitcoin’s price. His latest analysis leans towards the latter timeline as being more relevant.
Source: Colin Talks Crypto
Analyst Lyn Alden has also highlighted the predictive strength of global M2 regarding Bitcoin’s movement.
“Bitcoin trends in the direction of global liquidity 83% of the time within any given 12-month period, a higher correlation than any other major asset class, making it a reliable indicator of liquidity conditions,” she noted in September.
Most major assets show a significant correlation with global liquidity, but none more so than Bitcoin. Source: Lyn Alden
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