GlossaryM2 Delta
M2 Delta
M2 Delta measures whether the price is growing faster than the US money supply: the average price change per candle minus the average change in the money supply, smoothed over 100 days. Positive values are called “Discount”, negative ones “Premium”.
Zones
| Zone | Range |
|---|---|
| Strong discount | from +1.5% |
| Discount | +0.5 to +1.5% |
| Neutral | −0.5 to +0.5% |
| Premium | −1.5 to −0.5% |
| Strong premium | below −1.5% |
Positive values are orange, negative ones violet, each in four steps that get stronger at the boundaries 0.5, 1.0 and 1.5. Reference lines sit at these values on both sides; beyond ±1.5 the background is tinted.
How to read it
- Positive (Discount): The price is growing faster than the money supply; it is outrunning liquidity. The names follow the study's template.
- Negative (Premium): The price is falling behind the expansion of the money supply, or falling.
- In practice, the price alone almost entirely determines the value. The money supply grows by a few tenths of a percent a month; per daily candle, that is about a hundredth of a percent. So the study is mainly a smoothed momentum with a small deduction for money supply growth.
- The thresholds are the same on every interval. On weekly candles the changes per candle are larger, so the outer zones are reached more often there. With stocks, the curve mostly stays in the neutral band.
Good to know
- The comparison is only with the US M2 money supply, not with a global money supply.
- M2 is published monthly with a delay of a few weeks. The line only begins once price and money supply are available across the whole smoothing window.
- Intended for 1D to 1W.