Bitcoin’s Potential Rises as Global Liquidity Increases, Analyst Jamie Coutts Says

The lead cryptocurrency analyst at Real Vision has highlighted an intriguing correlation between Bitcoin and the global money supply (M2), suggesting a promising outlook for the flagship digital asset. Jamie Coutts took to X, a social media platform, to underscore how the historical relationship between Bitcoin and M2 indicates that Bitcoin is currently undergoing a consolidation phase, with the expanding money supply laying the groundwork for Bitcoin’s next upward movement.

Coutts emphasized the pattern observed over the past decade, where Bitcoin tends to reach a low point several months before M2 hits its bottom. Following this, Bitcoin experiences a surge, outpacing the liquidity trend, before undergoing a mid-cycle correction. He noted that the current environment is favorable for Bitcoin, with global liquidity gaining momentum while the market is shedding excesses from ETF launches and leverage, setting up what he described as a “perfect set up.”

Expanding on the link between Bitcoin and the money supply, Coutts shared a chart illustrating how Bitcoin tends to rise alongside M2, correcting itself once M2 reaches a short-term peak. He explained the necessity of continuous expansion in the money supply within a debt-based fractional reserve financial system to sustain outstanding debt, highlighting this as the system’s inherent state.

As of the time of writing, Bitcoin is valued at $61,323, marking a 7% increase over the week. Coutts’ colleague at Real Vision, Raoul Pal, previously echoed similar sentiments regarding liquidity flooding the markets. Pal pointed out potential interventions by countries like Japan in currency markets, injecting dollars into the global system, alongside other nations increasing liquidity to support their economies.

It’s worth noting that Coutts and Pal’s observations align with a broader narrative of the interplay between Bitcoin, global liquidity trends, and the broader financial landscape. The evolving dynamics between Bitcoin and traditional financial systems continue to attract attention and analysis from experts in the field as the digital asset ecosystem matures and interacts with the established financial infrastructure. This ongoing dialogue underscores the intricate relationship between Bitcoin and macroeconomic factors, shedding light on the evolving dynamics shaping the cryptocurrency market.