bitcoin is back in the red at press time, looking at the performance on the daily chart. After the unexpectedly bullish September bar close, the coin started off from a weaker base in October, falling nearly 5% from the $65,000 and $66,000 resistance zone.
Will bitcoin follow global M2 money supply growth to $90,000?
Despite the contraction, traders are confident about what lies ahead and expect the currency to turn the corner and print higher. In a post on x, an analyst x.com/JoeConsorti/status/1840772405817479350″ target=”_blank” rel=”noopener nofollow”>predict bitcoin will reach $90,000 in the next two months, especially if it continues to follow the global M2 money supply trend.
According to the analyst's findings, the global M2 money supply directly correlates with bitcoin prices. That means that every time there is an increase in the global money supply, btc prices also rise.
Currently, global liquidity is increasing. Therefore, if past correlation leads, there is a high possibility that the coin will not only surpass the March highs but also shoot up to $90,000, as per the analyst's prediction.
Currently, the local resistance zone lies at the September 2024 highs, around $65,000 and $66,000. If the bulls return, lifting sentiment and prices, bitcoin could skyrocket.
In the short term, there is strong resistance between $70,000 and $72,000. A break above this level could trigger a brief squeeze that could take the world's most valuable currency above March highs.
China boosts global liquidity, Fed plans to lower rates further
While technical considerations may support bitcoin bulls, analysts are closely monitoring the global M2 money supply. In a post on x, an observer x.com/TXMCtrades/status/1840408787686965426″ target=”_blank” rel=”noopener nofollow”>explains that global liquidity is increasing in part due to the weakening of the dollar.
As expected, whenever the Japanese, Chinese or even the European Union money supply increases in dollar terms, the value of the dollar tends to decrease, leading to a valuation change in the global M2 money supply.
The rebound in global liquidity in recent weeks, according to the analyst, is mainly due to monetary policy changes in China. The People's Bank of China has slashed interest rates and plans to pump in billions to stimulate the economy.
Its M2 money supply is larger than that of the United States in dollar terms. Subsequently, it is the main driver of the global expansion of the M2 money supply.
With the US Federal Reserve easing after suppressing the growth of its M2 money supply starting in 2022 to curb rampant inflation, bitcoin and risk assets will likely benefit.
After cutting rates by 50 basis points in September, Federal Reserve Chairman Jerome Powell has implied that the central bank could cut rates further in the fourth quarter of 2024.
Featured image from Canva, TradingView chart
