The Impact of Global Liquidity on Bitcoin Price | Expert Analysis by Top Investment Manager
In a recent development, renowned cryptocurrency trader Peter Brandt shared a crucial chart originally introduced by Raoul Pal. This chart illustrates the relationship between the price of Bitcoin and the global M2 money supply, shedding light on how macroeconomic factors, particularly liquidity, influence the performance of the cryptocurrency.
According to the charts, Bitcoin's price has generally mirrored the expansion of the global money supply, albeit with a slight delay. This correlation suggests that the overall liquidity conditions in the market play a significant role in determining Bitcoin's value. As the global money circulation increases, the demand for Bitcoin rises, subsequently driving up its prices. Further analysis by Raoul Pal indicates a similar trend with the GMI Total Liquidity Index, emphasizing the impact of global liquidity on Bitcoin's performance.
Both charts indicate that Bitcoin tends to surge when liquidity levels rise. Pal predicts further gains in M2 and liquidity, leading to a bullish outlook for Bitcoin until the end of 2024. Currently, Bitcoin is consolidating within a downward channel, with strong resistance observed near the $60,000 mark, as highlighted in Peter Brandt's technical price chart.
Despite the repeated rejections at the upper boundary, represented by the 200-day EMA, Bitcoin could potentially break above these resistance levels and witness a substantial price rally if global liquidity continues to increase, as suggested by the trends in M2 and the GMI Total Liquidity Index.
In simpler terms, as more money flows into the global economy, the demand for Bitcoin is likely to surge, thereby increasing its price. This macroeconomic analysis underscores the importance of understanding liquidity when forecasting the future movements of Bitcoin.
In conclusion, the analysis presented here underscores the crucial role of global liquidity in determining the price movements of Bitcoin. Understanding these dynamics can help investors make informed decisions and capitalize on potential opportunities in the cryptocurrency market.