Emily Walker
Experts have recently indicated that Bitcoin is likely to experience significant growth due to a substantial influx of liquidity expected in 2025, potentially bringing in $2 trillion in new investments into Bitcoin (BTC).
This forecast is based on anticipated increases in the global money supply by the US Federal Reserve, which could positively impact Bitcoin’s market capitalization and price trends.
Impact of Increased Liquidity on Bitcoin
Jamie Coutts, a leading crypto analyst from Real Vision, reports that the global money supply, known as M2, is projected to rise from $107 trillion to over $127 trillion by 2025. This 18% growth in liquidity, driven by various economic and monetary factors, could serve as a key trigger for Bitcoin’s value.
Coutts points out that historically, Bitcoin has absorbed about 10% of freshly introduced liquidity, indicating it may experience substantial capital inflows during the upcoming increase.
He elaborates that Bitcoin’s price performance is intricately linked to liquidity variations in the global economy. Data shows that from Q4 2022 to the present, the M2 money supply expanded from $94 trillion to $105 trillion.
Global M2 bottomed at $94T in Q4 2022 and has since climbed to $105T. During this period, Bitcoin’s market cap 5x’ed, adding $1.5T. In other words, 10% of the new money supply has leaked from the fiat system into the emerging global reserve asset of Bitcoin (gold, equities, etc… pic.twitter.com/w0vWIMufbg
— Jamie Coutts CMT (@Jamie1Coutts) November 28, 2024
During this timeframe, Bitcoin’s market capitalization increased five times, contributing an additional $1.5 trillion. This data suggests Bitcoin captured approximately 10% of the new liquidity entering the market, affirming its status as a rising global reserve asset.
Given the predicted $20 trillion boost in liquidity for 2025, Bitcoin might attract up to $2 trillion in new funds. Coutts states that the dual effects of monetary debasement and Bitcoin’s impressive average annual returns, which exceed 113%, will likely accelerate institutional adoption of the asset.
This trend solidifies Bitcoin as an “increasingly appealing option” compared to conventional investment alternatives, especially amid growing concerns about the stability of fiat currencies.
Future Outlook for Bitcoin in 2025
Coutts anticipates that the global M2 money supply will peak on January 26, 2026, as monetary policies continue to grow the money supply.
This prediction coincides with expectations that Bitcoin’s price might surge to $150,000 by 2025, driven by diminishing trust in the US dollar and traditional fiat systems, prompting investors to pursue alternative methods to preserve value.
Furthermore, institutional interest in Bitcoin is expected to increase as it proves to be a stable and profitable investment. With a burgeoning reputation as a safeguard against inflation and currency devaluation, Bitcoin is likely to attract a broader range of investors looking for security amid economic volatility.
Featured image created with DALL-E, Chart from TradingView