Analysts and historical chart patterns suggest that the growing money supply in the United States could be the catalyst for Bitcoin (BTC) to gain more upward momentum.
The M2 money supply, which includes cash and short-term bank deposits in the US, has shown a correlation with previous Bitcoin bull runs. According to Jamie Coutts, the chief crypto analyst at Realvision, the growth of the money supply could be the key to the next phase of the Bitcoin cycle.
Coutts emphasized that the changes in the money supply are more important for Bitcoin’s price than the nominal value. He pointed out that at the beginning of May, the M2 money supply turned positive year-over-year for the first time since November 2023. This indicates that investors may start seeking hedges against inflation, such as Bitcoin.
In addition to the money supply, the price action of the US dollar could also influence Bitcoin’s price. Coutts mentioned that if the dollar breaks below the 101 mark, it could serve as another catalyst for Bitcoin.
On May 16, Bitcoin broke its month-long daily downtrend, according to popular crypto analyst Rekt Capital. This breakout was also evident on the four-hour chart, following a nearly five-week downtrend that began on April 8.
However, the relative strength index (RSI) for Bitcoin peaked at 77 on May 16 before retracing to its current value of 66. While this suggests that Bitcoin is trading at fair value, it may need to fall to around the 50 mark to gain more upside momentum.
Bitcoin is currently facing significant resistance around the $66,500 mark. If it surpasses this level, it could result in the liquidation of over $111 million worth of leveraged short positions across all exchanges, according to Coinglass data.
It’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and exercise caution when making investment decisions.