Bitcoin has been on the rise, but it’s still about 13% below its all-time high of $73K. As October begins, often dubbed “Uptober” due to its historically positive price action, three factors could be critical in pushing BTC to a new price record.
These factors are linked to broader market conditions, increased spot market buying, and the potential influence of global M2 money supply.
New Bitcoin price range creates cautious optimism
Bitcoin’s price is maintaining a 24-hour range between $62K and $64K on CoinGecko. The price action has started to pick up and BTC is seeing a 10% return over the month. However, the top crypto by market cap is still 13% below its all-time high of $73K.
According to a Bitfinex report for September, Bitcoin surged by 26% since its lowest point in September. The report finds that BTC is currently trading within a consolidation range of $50,000 to $68,000, akin to its post-halving performance in 2020. And if historical trends persist, BTC could reportedly reach a new all-time high by late Q4 2024 or early 2025.
However, bull October or ‘Uptober’ for Bitcoin depends on three factors.
First is the state of the broader market, which is partly dependent on the US economy. Notably, Bitcoin surged past $65,000 before the start of October.
The Bitfinex report notes that October is historically an optimistic month for Bitcoin prices. It also underlines that the month has seen the highest average price increases with an average return of about 22.9% and a median return of 27.7% since 2013.
This means that Bitcoin might continue in line with its historic performance if macro factors do not weigh it down. For instance, the Fed’s loosening of monetary policy, like further rate cuts, generally has a positive reaction on riskier assets like BTC or tech stocks. However, if the tools lead to an economic slowdown, they also tend to be hit the hardest.
Spot buying and M2 money supply can play crucial roles
The second crucial aspect of the Bitcoin price rise is the increase in buying in the spot market.
The report notes that while Bitcoin is trading above the Short Term Holder Realised Price (STH-RP) range, investors are not buying with the same enthusiasm.
Additionally, a rise in futures trading shows more leverage buying, an activity that can potentially make the market more volatile if demand doesn’t pick up. Coinglass data also confirms that the BTC Futures open interest, which is given by the total number of outstanding derivative contracts, has been on the rise.
Exchange BTC Futures Open Interest (USD) | Source: Coinglass
The third and last factor that will possibly determine a new peak for Bitcoin is the M2 money supply. While the correlation is still speculative, many in the crypto community think Bitcoin’s price is connected to the global M2 money supply.
If bitcoin continues following the trajectory of global M2 money supply, it's heading to $90,000 before the end of the year. pic.twitter.com/Kd3YlDT12H
— Joe Consorti ⚡️ (@JoeConsorti) September 30, 2024
M2 money supply is the circulating money in the economy, like cash and deposits. Any increase in M2 would mean that global liquidity is rising. And if it rises due to the central banks printing more money or lowering interest rates, inflation could create pressure.
BTC, which is often considered a hedge during inflationary pressure, can rise in this situation, especially because exiting money would lose part of its value due to increased supply, and the market would prefer alternative money.
Investors have reasons to be cautiously optimistic about Bitcoin’s price in Q4. Historical interplay, economic indicators, and broader cryptocurrency developments have made any price predictions non-linear. That said, these three factors seem likely to directly impact BTC price over the next few months.
