Forget the price charts. Here's how bitcoin and S&P 500 look like when adjusted for the money printer

Bitcoin and the S&P 500 exhibit concerning valuation trends when adjusted for M2 money supply growth, according to analysis published on May 28, 2024. The adjusted S&P 500 shows a significant decline since its peak in late 2021, falling by approximately 40% from its inflation-adjusted high. This metric suggests that the market has not recovered as strongly as nominal price charts indicate, with the adjusted index currently sitting at levels not seen since early 2016. Similarly, Bitcoin's adjusted price also reveals a substantial drop from its all-time high, indicating that the cryptocurrency's perceived gains are diminished when accounting for the expansion of the money supply. The analysis highlights that the "money printer" effect, referring to quantitative easing and other monetary expansion policies, has inflated asset prices, and a normalization or reduction in this expansion would significantly alter the perceived value of these assets. The adjusted Bitcoin price has fallen by over 60% from its November 2021 peak, reaching levels comparable to those in mid-2020. This perspective challenges the narrative of robust recovery for risk assets, suggesting that much of the nominal price appreciation is a byproduct of increased liquidity rather than fundamental growth or adoption.