The positive trend in the M2 Money Supply suggests increased liquidity, which could propel Bitcoin. Despite this optimistic signal, other metrics indicate downward price pressure on cryptocurrencies.
After significant adjustments, Bitcoin has finally witnessed some positive movements on the price chart, with BTC rising nearly 5% in just 24 hours. Currently, at the time of writing, BTC is trading at $62,850. This upward trend has seen the cryptocurrency’s price surge from $57,000 in just a few days, potentially signaling a more favorable direction for the cryptocurrency market.
This positive development coincides with revelations from the co-founder of Apollo Sats, who recently emphasized a significant change in the M2 Money Supply. According to the CEO, the M2 Money Supply has transitioned from negative to positive on an annual basis, starting from May 1st.
Source: X
This is a significant update, indicating an increase in money circulation, which typically serves as a precursor for increased investment in assets such as Bitcoin during periods of rising inflation. Trader and financial author Oliver L. Velez recently commented on this:
“The M2 Money Supply is about to skyrocket, like never before. You might say ‘Bŕrŕrrrr, what?’ All I can say is, ‘buckle up’ and buckle down. Any and all dips are buyable. Consider them gifts and ignore the doomsayers. We’re nowhere near the end of BTC’s price surge.”
The significance of the M2 Money Supply change for Bitcoin
The M2 Money Supply represents all cash and short-term bank deposits nationwide. Its positive territory shift is a classic economic indicator that often directs investors’ attention to assets with a history of performing well during periods of high inflation.
In the realm of cryptocurrencies, such changes have historically yielded superior results compared to traditional financial markets. The latest positive adjustment in the M2 supply has sparked speculation among cryptocurrency traders about the potential for a sustained Bitcoin price increase.
Source: Glassnode
However, despite the optimistic outlook associated with the positive shift in the M2 supply, it is essential to consider other market indicators that continue to point towards ongoing downward price pressure. For instance, an analysis by Glassnode revealed an increase in Bitcoin’s net outflow across all groups throughout April, indicating persistent selling pressure.
Meanwhile, additional analysis of Bitcoin’s technical chart shows mixed signals. On the 4-hour chart, Bitcoin recently encountered a block of sell orders, hinting at a potential price reaction or reversal. This scenario is further supported by the formation of a bullish spinning top candlestick pattern, followed by a bullish engulfing candlestick. This often occurs prior to a market reversal from bearish to bullish conditions.
These chart formations indicate that while immediate bullish movements may occur, overall market sentiment remains cautiously optimistic.
In fact, cryptocurrency analyst Ali Martinez recently reinforced this sentiment by highlighting recent buy signals from Bitcoin’s Market Value to Realized Value (MVRV) ratio, providing another perspective on the current market momentum.