Bitcoin is trading above $85,500 after a recent recovery, aided by a rising global M2 money supply which traditionally correlates with asset price increases. Analysts predict increased volatility if liquidity around $85,800 is reached. A sustained rally could push Bitcoin towards $96,000 and potentially $95,000, contingent on favorable market conditions and resistance levels identified. Indicators are currently suggesting bullish momentum.
Bitcoin’s current price hovers just above $85,500, having recovered nearly 7% recently. This upward movement aligns with an increase in the global M2 money supply, which may encourage a bullish outlook for both Bitcoin and Gold. However, traders should remain vigilant, as the presence of significant liquidity near $85,800 could incite substantial market volatility if that level is reached.
As reported by MacroMicro, the total money supply across major economies has risen to $90.21 trillion since the beginning of the year. Historical trends most often show Bitcoin prices correlating positively with M2 growth. For example, during 2020’s economic stimulus phase, Bitcoin surged from $10,000 to $69,000, and significant new highs in M2 could lead to similar rallies for Bitcoin in the future.
Analyst Colin’s recent analysis on social media outlines a strong correlation between M2 money supply fluctuation and Bitcoin’s price, particularly emphasising a 107-day offset which indicates that changes in M2 can predict BTC price shifts with a notable lag. Historically, this trend signals potential price increases when global liquidity expands, often driven by central bank actions.
Current liquidity insights from Coinglass highlight that substantial liquidity exists at the $85,800 mark, suggesting that price movements could be sharp in that area. If Bitcoin continues to rally, it might encounter resistance around $96,000, defined as the Trader Realized Price, which has previously acted as a price support level in bullish phases.
Recently, Bitcoin’s price broke a key descending trendline, closing above $84,500 before settling at over $85,500. A daily close above $85,000 could prompt further rallies, potentially reaching the psychological threshold of $90,000 and testing previous highs of $95,000. Indicators like the RSI read 53, suggesting bullish momentum, while MACD signals indicate an upward trend.
For those unfamiliar, Bitcoin is the foremost cryptocurrency designed to facilitate decentralised transactions without reliance on traditional financial intermediaries. In addition, altcoins refer to any cryptocurrencies other than Bitcoin, while stablecoins are pegged to stable assets like the US Dollar to minimise volatility. Bitcoin dominance implies its market share relative to all cryptocurrencies, influencing investor behaviour, especially during market fluctuations.
