As an analyst with over two decades of experience in global financial markets, I find the correlation between Bitcoin and the global M2 money supply intriguing. Having closely followed Raoul Pal’s insights for several years now, I can attest to his keen eye for identifying patterns that others might miss.
A notable Bitcoin graph initially posted by Raoul Pal has recently been reshared by a renowned crypto trader, Peter Brandt. This graph illustrates the correlation between the price of Bitcoin and the worldwide M2 money supply, offering an understanding of how macroeconomic factors, specifically liquidity, can impact Bitcoin’s performance.
Charts indicate that the price of Bitcoin has generally followed, albeit slightly behind the expansion of the global money supply, or M2. This connection implies that general market liquidity conditions have a significant impact on the value of Bitcoin. When the global money circulation increases, it leads to a rise in demand for Bitcoin, which drives up prices. Deeper research by Raoul Pal reveals a similar pattern with the GMI Total Liquidity Index, another indicator of global liquidity in addition to the correlation between Bitcoin and M2.
Both graphs indicate that Bitcoin generally increases when liquidity expands. Pal expects further growth in M2 and liquidity, which could lead to a bullish outlook for Bitcoin until the end of 2024. As it stands, Bitcoin is currently gathering strength within a substantial downward trend, as suggested by Peter Brandt’s technical price chart. It seems that resistance is particularly strong around the $60,000 mark.
Over and over again, the price has been declined at the significant level represented by the 200-day Exponential Moving Average (EMA) for Bitcoin. Yet, if global liquidity continues to grow, as suggested by the tendencies of the M2 and GMI Total Liquidity Index, there’s a possibility that Bitcoin could burst through these resistance levels, potentially causing a substantial price surge.
In simpler terms, when there’s more money circulating in the global economy, there might be a higher interest in Bitcoin, causing its value to increase. This kind of analysis that considers the economy as a whole shows that predicting Bitcoin’s future price trends necessitates understanding liquidity levels.
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2024-09-17 14:56