- Bitcoin Price Dependence on Global Liquidity
- Bitcoin Price Change Predictions
- Macroeconomic Influence on Bitcoin
Recently, well-known cryptocurrency trader Peter Brandt shared an important chart first introduced by Raoul Pal. This chart illustrates the relationship between the price of Bitcoin and the global M2 money supply, providing insight into how macroeconomic factors, particularly liquidity, affect the cryptocurrency's performance.
Bitcoin Price Dependence on Global Liquidity
The charts indicate that the price of Bitcoin, though slightly lagging, generally follows the expansion of the global money supply (M2). This connection implies that general market liquidity conditions have a significant impact on the value of Bitcoin. When global money circulation increases, the demand for Bitcoin rises, driving up its price.
Bitcoin Price Change Predictions
Deeper research by Raoul Pal reveals a similar pattern with the GMI Total Liquidity Index, another indicator of global liquidity. Both charts show that Bitcoin typically rises when liquidity increases. Peter Brandt anticipates more gains in M2 and liquidity, which will contribute to a bullish prediction for Bitcoin through the end of 2024. Bitcoin is currently consolidating within a sizable downward channel, with resistance being strong near $60,000.
Macroeconomic Influence on Bitcoin
The price has been repeatedly rejected at the upper boundary, symbolized by the 200-day EMA. However, if global liquidity continues to rise, as indicated by the trends of the M2 and GMI Total Liquidity Index, Bitcoin might break above these resistance levels and experience a sizable price rally. Simply put, as more money enters the world economy, the demand for Bitcoin increases, raising its price. This type of macroeconomic analysis demonstrates that forecasting the future movements of Bitcoin requires an understanding of liquidity.
The study linking liquidity and Bitcoin price highlights the importance of macroeconomic factors in cryptocurrency analysis. With global liquidity expected to grow, the demand for Bitcoin is likely to continue rising, leading to an increase in its price.
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