Exploring Bitcoin’s Unique Correlation with Global Liquidity Trends
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Bitcoin’s Price Dynamics in Relation to Global M2 Money Supply
A Closer Look at Bitcoin’s Price and Global M2 Timing
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In a recent analysis, renowned crypto analyst Rekt Capital highlighted a noteworthy disconnect between Bitcoin’s peak price and the ongoing growth of the Global M2 money supply. His observations have sparked new discussions about what truly fuels the crypto bull market and the role liquidity trends play in shaping price cycles.
Rekt Capital’s detailed analysis reveals a notable timing inconsistency between Bitcoin’s movements and global liquidity levels, as measured by Global M2. While Bitcoin reached its historic high in November 2021, marking the pinnacle of the bull market, the Global M2 continued its upward trajectory for an additional five months, culminating in April 2022.
This five-month gap has prompted a fresh perspective on Bitcoin’s sensitivity to macroeconomic indicators and its potential as a forecaster of broader financial shifts. The analysis suggests that although liquidity conditions significantly impact Bitcoin, it doesn’t necessarily follow them in real-time. Instead, Bitcoin might predict changes in monetary policy and investor attitudes before they fully manifest in traditional financial indicators like the money supply.
Even after Bitcoin began its descent post-November 2021 peak, the global money supply’s expansion persisted, indicating that central banks and financial institutions were maintaining loose monetary conditions well into 2022. Rekt Capital’s insights do not imply a straightforward cause-and-effect relationship but rather emphasize the time lag between Bitcoin’s price behavior and global liquidity trends. This positions Bitcoin uniquely within the financial landscape as both a liquidity-sensitive asset and a potential early warning signal for broader market changes.
Anticipating a Bitcoin Surge with Global M2 Trends
Another crypto analyst, Crypto Con, has also offered valuable insights into the interplay between Bitcoin’s price and fluctuations in the Global M2 money supply, suggesting the potential for a substantial upswing in the leading cryptocurrency. A chart shared on June 25 illustrates a side-by-side comparison of Bitcoin’s historical performance with a 10-week forward-shifted Global M2 metric.
The chart unveils a recurring pattern: whenever Global M2 expanded, Bitcoin tended to rally approximately ten weeks later. Conversely, contractions in M2 typically preceded Bitcoin’s price declines by the same timeframe. This pattern has been observed during several pivotal turning points in the market cycle.
In April 2023, a notable drop in M2 coincided with a downturn in Bitcoin’s price. A reversal and subsequent increase in M2 around March 2024 aligned with the commencement of a sustained Bitcoin rally. Similarly, the December 2024 peak in M2 foreshadowed a Bitcoin correction several weeks later.
Based on these observations, current conditions remain promising. The forward-shifted Global M2 continues to exhibit an upward trend, indicating that Bitcoin may experience further positive movement through early September 2025.
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