Bitcoin Surges Past $100,000: Unpacking the Factors Behind the Cryptocurrency’s Rise
In a significant market development, Bitcoin has surged beyond the $100,000 threshold, reaching an impressive $104,000 before stabilizing at approximately $103,000. This upward movement follows the announcement of upcoming trade discussions between US and Chinese officials in Switzerland. The market responded with optimism, fueling Bitcoin’s ascent. However, experts suggest there is more to this story than meets the eye, with global liquidity playing a crucial role.
Understanding the Role of Global Liquidity in Bitcoin’s Growth
Global M2 Money Supply Reaches $111 Trillion
Julien Bittel, a macroeconomic analyst at Global Macro Investor, emphasizes the importance of the global M2 money supply as a leading indicator for Bitcoin’s trajectory. Bittel highlights a 12-week delay between shifts in M2 and Bitcoin’s price movements. Simply put, when global M2 increases, Bitcoin tends to follow suit approximately three months later.
Between early 2023 and early 2024, global M2 expanded from $98 trillion to just over $108 trillion. During this period, Bitcoin finally broke the $100,000 barrier. However, in mid-2024, the upward trend of M2 paused, leading to Bitcoin’s decline below $80,000. Bittel referred to this phase as a period of consolidation. Currently, M2 is on the rise again, surpassing $111 trillion. If this trend continues, Bitcoin could see further growth into mid-2025.
Julien Bittel’s Optimistic Outlook
Bittel confidently states, “We’re going higher,” attributing Bitcoin’s potential rise to the strengthening global M2.
Alternative Perspectives on Bitcoin’s Trajectory
Debate Over Bitcoin’s Position in Relation to Liquidity
Not all analysts share Bittel’s perspective. Benjamin Cohen, another financial analyst, questions the notion that Bitcoin consistently lags behind changes in liquidity. He points out that Bitcoin reached its peaks in 2017 and 2021 before M2 peaked, challenging the theory of a 12-week lag.
Cohen proposes an alternative view: Bitcoin might lead rather than follow liquidity changes. If this holds true, the recent surge in Bitcoin’s value could be an early indicator of an upcoming decrease in global liquidity.
Insights from Historical Market Events
Cohen also references the 2022 market downturn, where Bitcoin’s value plummeted alongside a dip in M2. However, the decline was exacerbated by the collapse of the FTX exchange. This suggests that Bitcoin’s price movements are not exclusively tied to M2 trends, as external factors such as exchange failures can disrupt expected patterns. His perspective offers a different forecast: If Bitcoin is trailing liquidity rather than leading it, the current rally may signal impending challenges rather than resilience.
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