Analysts are focusing on money supply expansion as a crucial indicator for the cryptocurrency market, particularly Bitcoin. They believe that the growth of money supply may lead to increased investments in high-risk assets such as cryptocurrencies.
Impact of Money Supply on Bitcoin Markets
Recent analysis has shown that Bitcoin markets may align with the 100-day offset of M2 money supply. Crypto YouTuber Lark Davis predicted a 'parabolic move' that could push Bitcoin's price to $250,000 in the coming months, although Bitcoin is currently lagging behind the growth of M2 money supply.
Growth of Money Supply in the US
In the US, the M2 money supply is 'resurging', according to Global Markets Investor. In May, M2 increased by 4.5% year-over-year to a record $21.94 trillion. It is expected to surpass $22 trillion in July, and if the trend continues, the money supply will double over the next decade.
Debunking the Correlation Theory Between Bitcoin and Money Supply
On July 7, Protos debunked the correlation between M2 money supply and Bitcoin prices, asserting that the relationship falls apart when the time frame on the charts is adjusted. While the correlation appears strong from 2021 to the present, when zoomed out to 2019, M2 begins to rise two years before Bitcoin.
In summary, the interaction between money supply expansion and the Bitcoin market generates diverse opinions among analysts. Although some growth predictions exist, it is essential to consider various time frames of analysis and the complex conditions influencing cryptocurrency prices.
