Market analyst believes M2 money supply is the determining factor for Bitcoin’s future actions

Bitcoin’s upward momentum could be driven by the expanding money supply in the United States, as suggested by market analysts and historical chart patterns. The M2 money supply, which includes all cash and short-term bank deposits in the country, has historically been correlated with previous Bitcoin bull runs. Jamie Coutts, chief crypto analyst at Realvision, noted that the growth of the money supply could be the key to the next phase of the Bitcoin cycle. He emphasized that the changes in the money supply hold more significance for Bitcoin’s price than its nominal value. In early May, the M2 money supply turned positive year-over-year for the first time since November 2023, indicating that investors may soon seek inflation hedges like Bitcoin. Additionally, Coutts highlighted that the price action of the U.S. dollar, particularly if it falls below the 101 mark, could also act as a catalyst for Bitcoin’s price. On May 16, Bitcoin broke its month-long downtrend, which was confirmed by popular crypto analyst Rekt Capital. The breakout occurred on both the daily and four-hour charts, suggesting a potential reversal of the previous downtrend. However, the relative strength index (RSI) for Bitcoin peaked at 77 on May 16 before retracing to 66. While this indicates fair value for Bitcoin, further upside momentum may require the RSI to fall to around the 50 mark. Bitcoin currently faces significant resistance at the $66,500 mark, and a move above this level could lead to the liquidation of over $111 million worth of leveraged short positions across exchanges, according to Coinglass data. It’s important to note that this article does not provide investment advice or recommendations and readers should conduct their own research before making any decisions.