One chart stands out as a ray of optimism for Bitcoin and its peers in the complex world of cryptocurrencies. Investors are at a pivotal point in time with the recovery of the US money supply. The threat of dollar depreciation is ever-present as printing presses produce fiat money more quickly.
The increase in the US M2 Money Supply points to a positive outlook for Bitcoin. Historically, when the M2 Money Supply rises, it tends to weaken the US Dollar, encouraging more people to diversify into Bitcoin, thus boosting its price. Analyzing data from the Federal Reserve Board of Governors highlights this significant pattern.
In April 2022, the M2 money supply hit its highest point at $21.722 billion, but by March 2024, it had gradually decreased to $20.841 billion. While this decline might appear modest, totaling $881 billion or 4.06% over roughly two years, it signifies the first drop of at least 2% since the Great Depression.
Open Interest Surge: Bitcoin Market Momentum
However, Examining Bitcoin’s response to past expansions in the M2 money supply, historical records indicate a positive outlook for the cryptocurrency. The consistent correlation between M2 growth and Bitcoin’s bullish market trends strengthens the belief that Bitcoin could be gearing up for another substantial upward trajectory.
Bitcoin’s price is showing signs of consolidation within a wide descending channel. Recent market activity has tested the $60,000 level once more. A breach of this threshold might break the descending pattern, possibly resulting in a significant drop towards the $52,000 support area. Bitcoin’s open interest has increased by 0.58% in the last 24 hours, reaching $16.3 billion.
The Relative Strength Index (RSI) indicates a bullish sentiment, as values exceeding 50% suggest momentum favoring buyers. Surpassing the $60,000 mark would likely amplify upward pressure in the market. While Bitcoin faces challenges in maintaining its upward momentum and reaching new peaks, bears have temporarily pushed prices down, though their grip seems fleeting.
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The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.
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