Escalating M2 Money Supply May Fuel Next Crypto Bull Run, Predicts Raoul Pal
Summary:
Raoul Pal, CEO of Real Vision, suggests that an increasing M2 money supply could trigger a crypto bull rally, outperforming traditional markets. Pal shared a graph illustrating a connection between the boost in fiat market supply and the beginning of the crypto bull run, underscoring that Bitcoin and the global M2 supply have increased simultaneously. Historically, a rise in the global M2 supply has led to Bitcoin and the crypto market surpassing traditional financial markets. Factors such as lowered interest rates, quantitative easing, and fiscal stimulus play significant roles in such surges alongside block reward halving.
Raoul Pal, co-founder and CEO of Real Vision, predicts that the escalating M2 money supply may fuel another surge in cryptocurrency, enabling it to surpass traditional markets. In a post on X, Pal illustrated a link between the expansion of the fiat market supply and the initiation of the crypto bull run. The graph he posted contrasted the annual progress of Bitcoin (BTC) with the worldwide M2 money supply, underscoring the concurrent escalation of Bitcoin and the global M2 supply. Previous trends show that when the global M2 supply rises, Bitcoin and the cryptocurrency market begin to excel over conventional financial markets.
A chart illustrates that as M2 supply grows, Bitcoin's price is on the brink of parting ways with the traditional market, a trend which resonates with historical patterns, as seen in the sharp increase of BTC's performance in 2021, 2017, and 2014.
The total money supply, or M2, is the sum of currency in circulation estimated by the U.S. Federal Reserve. It encompasses all the cash individuals possess and all money held in savings accounts, checking accounts, along with other short-term savings vehicles like certificates of deposit (CDs).
Bitcoin's cyclic bull spikes are often associated with the halving of the block reward every four years with the next one due in April 2024. This diminishes the market availability of BTC, heightening demand. However, numerous macroeconomic elements also significantly contribute to the surge.
Over the last ten years, the price of Bitcoin has witnessed substantial growth concurrent with the rapid increase of the M2 money supply, attributed to decreased interest rates, quantitative easing, and fiscal stimulus. Conversely, during periods of monetary contraction by central banks, the cryptocurrency market has had difficulty maintaining a bullish trajectory. The 2021 bull market happened simultaneously with a 6% or more combined M2 money supply expansion from the Fed, ECB, BOJ, and PBOC.
Published At
10/31/2023 9:23:09 AM
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