Bitcoin’s Rally Possibilities Linked to M2 Money Supply Growth and Fed Policy Changes Through 2025

• The latest analyses indicate that Bitcoin’s price is strongly linked to the global M2 money supply, hinting at a bullish phase in the crypto market as we approach March 2025.

• As analysts closely monitor global liquidity trends, many anticipate a substantial rally in Bitcoin and other cryptocurrencies, driven by recent increases in M2 since late 2024.

• Experts from various sectors outline an encouraging outlook for Bitcoin, accentuated by forecasts of Federal Reserve interest rate cuts, a weakening dollar, and the expansion of global money supply.

Bitcoin’s price is showing a strong correlation with the global M2 money supply, suggesting a bullish phase for 2025 as liquidity expands.

The Impact of Global M2 Supply on Bitcoin’s Future

The M2 money supply is vital for understanding market liquidity, encompassing cash, checking deposits, and other easily liquidated assets. Historically, Bitcoin’s value has thrived during periods of increased M2. As liquidity expands in financial markets, investments in cryptocurrencies tend to rise significantly.

Crypto analyst Colin Talks Crypto noted this correlation, referencing a recent “vertical line” on the global M2 chart, which he believes signifies an upcoming surge in asset prices. His forecast indicates that a rally for stocks and Bitcoin could begin on March 25, 2025, potentially lasting until around May 14, 2025.

“The Global M2 Money Supply chart has just printed another vertical line, indicating an epic rally ahead for Bitcoin and altcoins,” he remarked.

According to Vandell, co-founder of Black Swan Capitalist, fluctuations in Bitcoin’s price align closely with changes in global M2 supply. He observed that declines in M2 usually precede downturns in Bitcoin and the broader cryptocurrency markets by about ten weeks.

Despite potential short-term declines, Vandell asserts that this liquidity shift sets the groundwork for a long-term uptrend.

“We’ve seen that when M2 decreases, Bitcoin follows about ten weeks later. Although more dips could occur, this adjustment is a standard cycle that positions us for a future price increase,” he explained.

Popular analyst Michaël van de Poppe also considers M2 expansion a crucial indicator for an optimistic market recovery. He enhances this viewpoint by suggesting that diminished inflation concerns and anticipated Federal Reserve rate cuts will significantly bolster Bitcoin’s financial environment.

“In essence, inflation is decreasing in importance, likely leading to Fed rate cuts. The dollar is expected to weaken, yields to fall, and M2 supply to markedly expand. As these changes occur, it’s only a matter of time before altcoins and cryptocurrencies rise,” he stated.

Correlations and Historical Patterns

The relationship between Bitcoin’s valuation and global M2 growth has historical precedence. Recent comments from macroeconomist Tomas draw parallels to market cycles in 2017 and 2020, when significant M2 hikes aligned with Bitcoin’s most robust performances.

“Currently, global money supply is expanding. Previous surges in 2017 and 2020 both coincided with peak moments for Bitcoin. Will 2025 echo these patterns? Much depends on the U.S. dollar’s performance,” Tomas remarked.

Tomas also indicated that central bank actions play a significant role, arguing that while central banks ease interest rates, the strength of the dollar will be a decisive factor. Should the dollar index (DXY) drop to the vicinity of 100 or lower, it might replicate conditions experienced in past Bitcoin bull runs.

The Federal Reserve: A Key Player in the Crypto Arena

Macro researcher Yimin Xu posited that the Federal Reserve might cease its Quantitative Tightening (QT) measures later this year, possibly transitioning to Quantitative Easing (QE) if warranted by the economic climate. This change could inject additional liquidity into the markets, significantly benefiting Bitcoin’s upward trend.

“I speculate that the Fed may find reserves too low for comfort in the latter half of the year. I predict QT will end by late Q3 or Q4, paving the way for potential QE,” Xu analyzed.

Tomas concurred, noting that the Fed’s strategy to enhance its balance sheet aligns with GDP growth. He articulated that an impactful financial event could catalyze a comprehensive return to QE.

While uncertainties persist regarding the U.S. dollar’s resilience and potential economic shocks, the consensus among analysts largely points toward an optimistic phase for Bitcoin.

Investors are encouraged to conduct thorough research as macroeconomic indicators evolve over the coming months, assessing whether the anticipated rally will build momentum.

Conclusion

In summary, the interplay between Bitcoin’s price and the global M2 money supply showcases compelling trends that hint at an optimistic horizon for the cryptocurrency. As liquidity expands and macroeconomic conditions change, Bitcoin may soon embark on another significant rally, marking another chapter in its storied evolution.