Bitcoin and Macroeconomic Factors

An important Bitcoin chart that Raoul Pal originally shared was recently highlighted by renowned cryptocurrency trader Peter Brandt. The chart illustrates the relationship between Bitcoin’s price and the global M2 money supply, providing insights into how macroeconomic variables, particularly liquidity, influence the cryptocurrency’s performance.

The data indicates that Bitcoin’s price has predominantly followed the expansion of the global money supply (M2), albeit with a slight lag. This connection suggests that general market liquidity significantly impacts Bitcoin’s value. An increase in global money circulation leads to heightened demand for Bitcoin, consequently driving up its price.

Raoul Pal’s deeper analysis reveals a similar trend with the GMI Total Liquidity Index, another measure of global liquidity. Both charts support the observation that Bitcoin typically appreciates when liquidity increases. Pal foresees continued gains in M2 and liquidity, leading to a bullish outlook for Bitcoin through the end of 2024.

Currently, according to Peter Brandt’s technical price chart, Bitcoin is consolidating within a substantial downward channel, facing resistance around the $60,000 mark. The price has repeatedly faced rejection at the upper boundary, represented by the 200-day EMA. However, should global liquidity continue to rise, Bitcoin could potentially break through these resistance levels and experience a significant price rally.

In summary, as more money flows into the global economy, demand for Bitcoin may rise, thus elevating its price. This macroeconomic analysis underscores the importance of understanding liquidity when predicting future Bitcoin movements.

This article was originally published on U.Today