Bitcoin’s price has been pretty stable lately, hovering around $108,000 to $110,000. Even the volatility seen earlier this year hasn’t really changed that.
The Money Supply Connection
Analyst Kyle Chassé believes Bitcoin’s price is closely tied to the global M2 money supply, but with a three-month delay. He’s found that when global liquidity increases, Bitcoin tends to follow suit about 90 days later.
Bitcoin’s Recent Price Action
Bitcoin’s price surged above $109,000 in January, then dipped below $75,000 in April before climbing back up. Chassé sees this as part of a larger cycle, not the end of a bull run.
The $400,000 Prediction
Global M2 has been steadily rising. Chassé predicts that if this trend continues, Bitcoin could reach a whopping $400,000 – a 270% increase from its current price. He calls this a “coded” relationship.
Other Factors at Play
While the money supply is a significant factor, it’s not the only one. Interest rates, government policies, and other market signals also influence Bitcoin’s price. For example, if central banks raise interest rates aggressively, it could hurt Bitcoin’s price, even if the money supply is growing.
What the Future Holds
Global M2 seems to lead Bitcoin by about 12 weeks. If M2 growth slows, Bitcoin might stay flat or even dip. Conversely, a surge in liquidity could push Bitcoin to new highs.
The Bottom Line
The relationship between the money supply and Bitcoin’s price is a helpful tool for long-term investors. It’s not a perfect predictor, but understanding this connection can improve your timing in the market.
