- The significant rise in Bitcoin’s ($BTC) price is driven by increased money supply in the United States, as global liquidity heads towards the $100 trillion milestone.
- Global supply, measured as M2, has reached near-historical highs, correlating positively with Bitcoin’s value.
- Philip Swift, founder of LookIntoBitcoin, recently highlighted that the current $94 trillion M2 figure significantly surpasses the levels seen when Bitcoin last reached an all-time high.
Bitcoin’s price rise could be fueled by the surge in global liquidity, with the M2 money supply nearing $100 trillion.
Global Liquidity Nearing Historic Highs: Impact on Bitcoin
Recent data indicates that global liquidity, represented by M2, is approaching the $100 trillion threshold. According to Philip Swift from LookIntoBitcoin, this increase in liquidity is a critical factor that has historically influenced Bitcoin prices. The current figure of $94 trillion is a substantial jump from late 2021 when the M2 was lower and Bitcoin reached its previous peak of $69,000.
Correlation Between M2 and Bitcoin Price Trends
Historically, there has been a noticeable correlation between the M2 money supply and Bitcoin’s market performance. An analysis shared by Swift on the platform X reveals that the recent surge in global liquidity is aligning with bullish forecasts for Bitcoin. The M2’s rebound from $85 trillion in late 2022 to its current level underscores this upward trend, suggesting potential for further Bitcoin price increases.
Institutional Investment and Portfolio Diversification
Institutional investors are increasingly viewing Bitcoin as a crucial asset for portfolio diversification. Year-to-date, cryptocurrency investment products have experienced significant inflows, totaling $15 billion. Of this, a staggering $14.74 billion has been directed towards Bitcoin-related investment products, indicating strong institutional confidence in Bitcoin’s future potential.
Ethereum and Solana Investments on the Rise
Investment products linked to Ethereum ($ETH) also saw substantial inflows recently, amounting to $33.5 million, following the SEC’s approval for the listing of spot Ether ETFs. This brings the total year-to-date inflows for Ethereum to $11 million. Additionally, products offering exposure to Solana ($SOL) have seen inflows of $5.8 million, bringing their total for the year to $35 million. Conversely, multi-digital asset products have faced outflows, indicating a more focused investment strategy among institutional players.
Conclusion
In summary, the expanding global liquidity represented by the near $100 trillion M2 money supply is seen as a significant driving force behind Bitcoin’s price escalation. The strong correlation between M2 and Bitcoin historically suggests that continued liquidity growth could further propel Bitcoin’s value. Additionally, the robust inflows into Bitcoin-focused investment products reflect growing institutional interest and confidence, setting the stage for potentially new highs in the cryptocurrency market.
