Bitcoin price faces pressure, but macroeconomic trends and regulatory shifts could drive future growth with BTC poised to reach six-figures once again.
Some analysts argue that Bitcoin’s price is closely linked to the global monetary base, meaning it tends to rise as central banks inject liquidity.
With recession risks mounting, the likelihood of expansionary monetary policies increasing the money supply grows. If this correlation holds, Bitfinex whales could be well-positioned to capitalize on a rally above $105,000 in the next two months.
For instance, X user Pakpakchicken claims to have identified an 82% correlation between the global money supply (M2) and Bitcoin’s price.
When central banks drain liquidity by raising interest rates or reducing bond holdings, traders become more risk-averse, leading to weaker demand for Bitcoin. Conversely, periods of monetary easing tend to fuel greater investor interest in the asset, increasing its price potential.
Bitfinex whales go long BTC as M2 bottoms
In early September 2024, Bitfinex margin traders added 7,840 BTC in long positions, coinciding with a period of bearish momentum as Bitcoin struggled to reclaim the $50,000 level for over three months.
Despite the downturn, Bitfinex whales held their positions, and Bitcoin’s price surged past $75,000 less than two months later. Notably, the global M2 money supply bottomed out around the same time these traders increased their Bitcoin exposure, further reinforcing the correlation.
It may be impossible to establish a direct cause-and-effect relationship between money supply and investors’ willingness to accumulate Bitcoin, especially given the influence of major events during these periods.
For example, Donald Trump’s election as US president in November 2024 significantly fueled Bitcoin’s rally due to the new administration’s pro-crypto stance, regardless of global M2 trends and liquidity conditions.
