The price of the flagship cryptocurrency Bitcoin ($BTC) is set to benefit from the growth of money supply in the United States as global liquidity has recently surged to near the $100 trillion mark, at a time in which BTC itself is trading at $71,000.
According to a chart shared on the microblogging platform X (formerly known as Twitter) by the founder of on-chain data service LookIntoBitcoin, Philip Swift, global supply – known as M2 – is nearing a historic high around $100 trillion.
This unprecedented level of liquidity is historically correlated with Bitcoin price movements, according to Swift. His platform, as Cointelegraph first reported, tracks global M2 data and compares it to Bitcoin price behavior, and shows that the current M2 of $94 trillion dwarfs the figure observed in late 2021, when Bitcoin hit its previous all-time high of $69,000, with a $3 trillion increase.
The most important chart for this bull run has just made a new all-time high.Are you ready?#bitcoin pic.twitter.com/hZsF6ljsvR
— Philip Swift (@PositiveCrypto) June 5, 2024
Furthermore, M2 has rebounded a full 10% since dipping to $85 trillion in late 2022, coinciding with the depths of the crypto bear market. These findings resonate with other recent liquidity-based analyses, which also project a bullish outlook for Bitcoin.
The relationship between Bitcoin and the U.S. M1 money supply is also noteworthy. This metric is currently breaking out of a seven-year consolidation period – the longest in Bitcoin’s history – suggesting significant room for growth.
Institutional investors appear to be using Bitcoin as a way to diversify their portfolios, with cryptocurrency investments products year-to-date having seen $15 billion of inflows, of which $14.74 billion were to products offering exposure to BTC.
Products betting on the second-largest cryptocurrency, Ethereum’s ETH, saw $33.5 million inflows in the week, after the U.S. Securities and Exchange Commission (SEC) cleared the path for the listing of spot Ether exchange-traded funds (ETFs) in the country, bringing their year-to-date flows to just $11 million.
Meanwhile, products offering exposure to Ethereum rival Solana ($SOL) saw $5.8 million worth of inflows, bringing year-to-date flows to $35 million. Products focusing on multiple digital assets saw $2.7 million of outflows last week.
Featured image via Unsplash.