Bitcoin Long-Term Projections: Why You Should Keep an Eye on Key Indicator
M2 Money Supply’s positive trend suggests that increased liquidity could boost Bitcoin. Despite this optimistic sign, other metrics point to bearish pressures on the cryptocurrency.
After major corrections, Bitcoin is finally seeing some positive movement on the price charts, with BTC up almost 5% in just 24 hours. In fact, at the time of writing, BTC was trading at $62,850. This rally has seen the price of the cryptocurrency rise from the $57,000 range in just a few days. What this also means is that the trend of the cryptocurrency market may finally be changing for the better.
This positive development coincided with a revelation from Apollo Sats co-founder, who recently highlighted a significant change in the M2 money supply. According to the executive, the M2 money supply has gone from negative to positive year after year, as of May 1.
This is a crucial update, suggesting an increase in money circulation, which has historically acted as a precursor to increased investment in assets like Bitcoin during periods of rising inflation. Trader and financial author Oliver L. Vélez commented on the same recently, stating the following:
“The M2 money supply is about to go ballistic, like never before. Can you say “Bŕrŕrrrr”? All I can say is “buckle up” and stack harder. Each and every dip can be purchased. Consider them gifts and ignore the fools who call for doom. “We are nowhere near the end of the BTC bull market.”
Implications of the M2 Money Supply Change on Bitcoin
The M2 money supply represents all the cash and short-term bank deposits in the entire country. Its transition into positive territory is a classic economic indicator that often leads investors to focus on assets that have historically performed well during periods of high inflation.
In the cryptocurrency space, these changes have previously catalyzed outperformance, compared to traditional financial markets.
The latest positive tightening in M2 supply has sparked speculation among cryptocurrency traders about the potential for a prolonged rally in the price of Bitcoin.
However, despite the optimistic outlook linked to M2 supply positivity, it is essential to consider other market indicators that continue to point to ongoing bearish pressures.
An analysis by Glassnode revealed an increase in net Bitcoin outflows across all cohorts throughout April, indicating persistent sell-side pressure.
Meanwhile, further analysis of Bitcoin technical charts presented a mixed signal. On the 4-hour chart, Bitcoin recently encountered an order block, hinting at a possible price reaction or reversal. This scenario was further supported by the formation of a bullish spinning top candle pattern, followed by a bullish engulfing candle. This usually precedes a reversal from bearish to bullish market conditions.
These chart formations suggest that while immediate bullish moves are possible, overall market sentiment remains cautiously optimistic.
In fact, cryptocurrency analyst Ali Martinez reinforced this sentiment recently by highlighting a recent buy signal from Bitcoin’s market value to realized value ratio (MVRV), adding another layer of insights to the current market dynamics:
“The last three times the #Bitcoin 30-day MVRV dropped below -9% in the last two years, the price of $BTC emerged by 64%, 63%, and 99%, respectively. The #BTC 30-day MVRV is currently at -11.6%, suggesting it may be time to buy the dip!,” Martinez posted on X.
By Audy Castaneda