Bitcoin is back in the red at the time of writing, looking at its performance on the daily chart. After closing the unexpectedly bullish September bar, the coin started October on a weaker footing, falling almost 5% against the $65,000 and $66,000 resistance zone.
Will Bitcoin Follow Global M2 Money Supply Growth to $90,000?
Despite the contraction, traders are confident about what lies ahead and expect the currency to turn the corner and print higher. In a post on X, an analyst predicts Bitcoin will reach $90,000 in the next two months, especially if it continues to follow the global M2 money supply trend.
According to the analyst’s findings, the global M2 money supply directly correlates with Bitcoin prices. This means that when there is an increase in the global money supply, BTC prices can also increase.
Currently, global liquidity is increasing. Therefore, if the correlation leads from the past, there is a high chance that the coin will not only break above the March highs, but also rise to $90,000, according to the analyst’s forecast.
Currently, the local resistance zone is at the September 2024 high around $65,000 and $66,000. If the bulls flow back, driving sentiment and prices higher, Bitcoin could rise.
In the short term, strong resistance exists between $70,000 and $72,000. A breakout above this level could trigger a short squeeze, which could see the world’s most valuable coin break above its March highs.
China is boosting global liquidity, the Federal Reserve plans to further cut interest rates
While technical considerations may support the Bitcoin bulls, analysts are keeping a close eye on the global M2 money supply. In a message on X, one observer explains that global liquidity is rising partly as a result of the weakening USD.
As expected, the value of the dollar tends to decline when the USD money supply of Japan, China or even the European Union increases, leading to a devaluation change in the global M2 money supply.
According to the analyst, the increase in global liquidity in recent weeks is mainly due to changes in monetary policy in China. The PBoC has cut interest rates and plans to inject billions to stimulate the economy.
The M2 money supply is greater than that of the United States in USD terms. Subsequently, it is the main driver of the global expansion of the M2 money supply.
With the US Federal Reserve relaxation After suppressing M2 money supply growth from 2022 to curb runaway inflation, Bitcoin and risk assets are likely to benefit.
After cutting rates by 50 basis points in September, Federal Reserve Chairman Jerome Powell has now done so hinted that the central bank could cut interest rates even further in the fourth quarter of 2024.
Feature image from Canva, chart from TradingView