Rising U.S. Money Supply May Fuel Bitcoin's Potential Growth
Summary:
The expanding money supply in the U.S., tracked by M2, could potentially increase Bitcoin's value, with historical data showing a strong correlation between the two. The rise in M2 has historically paralleled Bitcoin's bull markets. The growth in M2 indicates investors may soon turn to Bitcoin as a hedge against inflation. Meanwhile, Bitcoin's value saw a positive shift for the first time in five weeks, which market watchers attribute to changes in M2 momentum.
Fluctuations in the United States' expanding money supply could trigger more growth in the value of Bitcoin (BTC), market experts and historical data suggests. The premise is that escalation in M2 money supply might spark the next bull market. The M2 money supply tracks all cash and short term banking deposits within the U.S. Historical statistics have confirmed that its expansion has paralleled previous Bitcoin bull markets.
Jamie Coutts, Realvision's Chief Crypto Analyst, postulated on May 16 that the expansion of the money supply could be a key indicator for Bitcoin's future growth trajectory. Coutts cites a strong correlation with Bitcoin bull cycles and notes the Global M2 capture masks most of the movements. Nevertheless, Coutts emphasizes that changes in money supply hold more weight in influencing Bitcoin value than the nominal value itself.
Coutts stated, "The rate of change in money supply is more important than the nominal value. Our MSI performance tables confirm this: shifts in M2 momentum usually coincide with Bitcoin movements."
In early May, the M2 money supply exhibited a positive annual growth for the first time since November 2023. This new development signals the possibility of investors seeking inflation hedges, such as Bitcoin, in the near future.
Coutts points out that the U.S. Dollar's value trajectory could be another influential factor for the Bitcoin price, should it fall below the 101 mark. Coutts suggests, "Should the Dollar drop below 101, it could serve as rocket fuel to boost Bitcoin."
Popular crypto analyst, Rekt Capital, proclaims that Bitcoin broke free from its month-long daily downtrend on May 16. Using a post to outline this observation to his followers, he suggests the end of a downtrend typically ushers in a phase of upward trends. Bitcoin has reported its first high since reaching to the $56,000 mark.
On the four-hour chart, Bitcoin price saw an uphill shift, concluding a nearly five-week long downturn since April 8.
However, the Bitcoin's RSI (Relative Strength Index, an indicator used to measure overbought or oversold assets) soared to 77 on May 16 and subsequently dropped to the current 66 value. This suggests that Bitcoin is trading at fair value, but a drop to around 50 may be needed for additional upward momentum to take shape.
Bitcoin price is currently up against significant resistance around $66,500 and a push upwards could force liquidation of leveraged short positions amounting over $111 million across all exchanges.
Please note, this article is written for informational purposes and does not offer investment advice or recommendations. All investment and trading decisions carry inherent risks. Readers are advised to perform their own research before making any decision.
Published At
5/16/2024 7:40:25 PM
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