Currently, Bitcoin is experiencing a decline, as observed in the daily performance charts. After a surprisingly strong month in September, the cryptocurrency began October on a down note, falling nearly 5% from the resistance levels near $65,000 and $66,000.
Could Bitcoin Hit $90,000 By Following Global M2 Money Supply Trends?
Despite this dip, many traders remain optimistic about Bitcoin’s future potential. An analyst recently shared on X that he believes Bitcoin could reach $90,000 within the next two months, especially if it continues to align with the trends in global M2 money supply.
The analyst noted that there is a direct relationship between the global M2 money supply and Bitcoin prices. When the global money supply increases, Bitcoin’s value tends to rise as well.
Currently, global liquidity is on the rise. If the previous pattern holds true, there’s a strong chance Bitcoin might not only surpass its highs from March but could climb up to $90,000, according to the analyst’s forecast.
The immediate resistance is seen around the September highs of $65,000 and $66,000. Should bullish momentum return and lift both sentiment and prices, Bitcoin might experience significant gains.
In the near term, significant resistance exists around $70,000 to $72,000. If Bitcoin manages to exceed this range, it could trigger a short squeeze, potentially leading to a new peak above the March highs.
China’s Role in Global Liquidity and Federal Reserve’s Interest Rate Adjustments
Technical factors may be favorable for Bitcoin, but analysts are paying close attention to the global M2 money supply. An observer on X recently pointed out that the rise in global liquidity is partly due to the weakening of the US dollar.
Typically, when the money supply increases in major economies like Japan, China, or the European Union, it impacts the value of the USD, resulting in shifts in global M2 money supply valuations.
The recent increase in global liquidity has been largely attributed to changes in monetary policies in China. The People’s Bank of China (PBoC) has lowered interest rates and proposed injecting billions into the economy to stimulate growth.
In terms of USD, China’s M2 money supply is now larger than that of the US, making it a key player in the expansion of global M2 money supply.
As the US Federal Reserve begins to ease its previously restrictive measures—having suppressed M2 growth since 2022 to combat inflation—Bitcoin and other high-risk assets are likely to benefit.
After a 50 basis point rate cut in September, Jerome Powell, the head of the Federal Reserve, has suggested that further rate cuts could occur in the fourth quarter of 2024.
