A key Bitcoin bull signal flashed for the first time in nearly a year, signaling a potential price breakout.
The global liquidity model’s bullish Bitcoin (BTC) signal was shared by Jamie Coutts, a chief crypto analyst at Real Vision.
Coutts expects Bitcoin to go “much higher,” based on this signal, he wrote in an Aug. 15 X post:
“My composite global liquidity momentum model (MSI), has provided the first Bullish regime signal since November 2023. Recall that Bitcoin rallied 75% from Nov to April before the regime flipped Bearish”
Bitcoin trend and global liquidity regime. Source: Jamie Coutts
This same bullish signal preceded a 19-fold Bitcoin rally in the 2017 cycle and a six-gold rally in the 2020 cycle, according to Coutts.
Can Bitcoin price double to around $120,000?
The bullish signal could translate into a two to three-fold increase in Bitcoin price, according to Coutts’ estimates.
However, this is largely dependent on the performance of the Dollar Index (DXY) and overall global liquidity, explained Coutts:
“For BTC to meet this target, the DXY would need to be well below 101, prompted by ongoing central bank injections. This would push global M2 well over $120T this cycle.”
However, Bitcoin prices may face headwinds in the short term. Over $1.4 billion worth of Bitcoin options are set to expire on Aug. 16 at 8:00 am UTC unless Bitcoin can stage a recovery above $60,000.
Growing M2 money supply could bolster Bitcoin price
The continually expanding global M2 money supply could help Bitcoin break out above $60,000.
During the past month, the Bank of Japan (BOJ) added $400 million while the People’s Bank of China (PBOC) added $97 billion worth of credit to the global money base, which expanded by $1.2 trillion, according to Coutts.
This trend is likely to continue due to the economics of the fractional reserve system, added Coutts:
“This is the natural state in a credit-based fractional reserve system. The money supply must continually expand to support the outstanding debt. Otherwise, everything will collapse.”
However, Bitcoin’s price action will greatly depend on the inflows from the US spot Bitcoin exchange-traded funds (ETFs), which have recently been stagnating.
Bitcoin ETF Flow (USD, million). Source: Farside Investors
Following two consecutive days of positive inflows, ETF inflows turned negative on Aug. 14, as the US ETFs saw a cumulative $81 million worth of negative outflows, according to Farside Investors data.
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