While the cryptocurrency market is eagerly anticipating bitcoin (btc) to surpass the $100,000 price level, the leading cryptocurrency may have even more room to grow in 2025 as the global M2 money supply expands.
Global Liquidity Surge: A Catalyst for bitcoin?
in a detailed <a target="_blank" href="https://x.com/Jamie1Coutts/status/1862006636434583927″ target=”_blank” rel=”noopener nofollow”>analysis On
Coutts noted that after bottoming at $94 trillion in the fourth quarter of 2022, the global M2 money supply has risen to $105 trillion. During the same period, bitcoin's market capitalization quintupled, from approximately $400 billion to nearly $2 trillion at the time of writing. He added:
In other words, 10% of the new money supply has leaked from the fiat system into bitcoin's emerging global reserve asset (gold, stocks, etc. have also absorbed new money). What happens if M2 expands by the usual $30 trillion this cycle?
Notably, the global money supply M2 It is projected to exceed $127 trillion in 2025 due to concerns about global liquidity, an increase of more than 18% from the current $107 trillion. Assuming 10% of this increased liquidity (around $2 trillion) is captured by btc, the price of the digital asset could skyrocket in 2025.
To reinforce his argument, Coutts shared the following chart comparing the expansion of the Federal Reserve's balance sheet, the growth of the US M2 money supply, changes in US real wages, and the performance of bitcoin prices. The data reveals that btc has significantly outperformed other instruments, especially as the US dollar depreciates with increased supply.
Mixed Opinions on btc and Money Supply Correlation
While some analysts predict that bitcoin will benefit from the growing money supply, opinions differ regarding the strength of this correlation. The global M2 money supply, which includes all cash and short-term bank deposits, is expected to peak in January 2026 before contracting to $118 trillion later that year. On this trajectory, bitcoin could potentially reach $150,000.
However, on the contrary, cryptanalyst Joe Consorti <a target="_blank" href="https://x.com/JoeConsorti/status/1861125527764971521″ target=”_blank” rel=”noopener nofollow”>warned that btc's correlation with the global M2 money supply could drag it down by 20% to 25%, reaching $70,000. In response, entrepreneur David Quintieri said that btc is too volatile to be meaningfully tracked against anything.
2024 has been a pivotal year for the leading cryptocurrency, with the approval of spot bitcoin exchange-traded funds (ETFs) in the US, the bitcoin halving, growing institutional adoption, and the victory of the pro-crypto Donald Trump in the November elections.
In such a bullish context, it is not surprising to see ambitious btc price targets are shared by institutional investors. btc is trading at $97,944 at press time, up 3.1% in the last 24 hours.
Featured image from Unsplash.com, charts from x.com and TradingView.com
