Looking at the performance on the daily chart, Bitcoin is back in the red at the time of writing. After an unexpectedly bullish end to September, the coin started October on weaker footing, dropping nearly 5% from the $65,000 and $66,000 resistance zones.
Will Bitcoin follow the growth of global M2 money supply to $90,000?
Despite the contraction, traders remain confident about what lies ahead and expect the coin to turn a corner and the stock price to rise. In a post about X, one analyst said predict Bitcoin will reach $90,000 in the next two months, especially if we continue to track global M2 money supply trends.
According to analyst research, the global M2 money supply is directly correlated to Bitcoin price. In other words, every time the world money supply increases, the price of BTC will also increase a little bit.
Liquidity is currently increasing worldwide. Therefore, if historical correlations are anything to go by, the coin is likely to not only break out of its March highs but also soar to $90,000, as predicted by analysts.
Local resistance zones are currently located at the September 2024 highs of approximately $65,000 and $66,000. Bitcoin could soar if the bulls reverse and sentiment and price rise.
In the short term, strong resistance exists between $70,000 and $72,000. A break above this level could trigger a short squeeze, pushing the world’s most valuable coin above its March high.
China boosts global liquidity as Fed plans further rate cuts
While technical considerations could support a Bitcoin bull run, analysts are closely monitoring global M2 money supply. In a post about X, one observer said explain Global liquidity is said to be increasing due in part to the weakening dollar.
As expected, whenever the money supply of Japan, China, or even the European Union increases in USD terms, the value of the dollar tends to decline, leading to a change in the valuation of the world’s M2 money supply.
Analysts say the rise in global liquidity in recent weeks is largely due to changes in China’s monetary policy. The People’s Bank of China plans to cut interest rates and inject billions of dollars to stimulate the economy.
M2 money supply is larger than the US in US dollar terms. This has since become the main driver of global M2 money supply expansion.
Bitcoin and risk-on assets are likely to benefit as the US Federal Reserve eases after curbing money supply M2 growth starting in 2022 to curb runaway inflation.
After Fed Chairman Jerome Powell cut interest rates by 50 basis points in September, hinted The central bank is expected to cut interest rates further in the fourth quarter of 2024.
Featured image from Canva, chart from TradingView
