According to recent analysis by cryptocurrency experts, the price movement of Bitcoin (BTC) is closely related to the global M2 money supply. Based on this, they predict a potential upward momentum in the cryptocurrency market by the end of March.
As global liquidity expands, analysts forecast that Bitcoin and other digital assets could experience substantial gains starting around March 25, 2025 and continuing through mid-May.
Will Global M2 Affect Bitcoin's Rise?
M2 money supply represents a broad measure of liquidity, including cash, demand deposits, and easily convertible assets. Historically, Bitcoin has shown a strong correlation with M2 fluctuations, and the increase in financial market liquidity often drives demand for alternative assets like cryptocurrencies.
Analyst Colin Talks Crypto, active on X(SNS), emphasized this correlation and pointed to the sharp increase in global M2, depicting it as a "vertical line" on the chart, signaling an impending surge in asset prices.
According to his forecast, the rally in stocks, Bitcoin, and the broader cryptocurrency market is expected to begin on March 25, 2025 and continue until May 14.
"The global M2 money supply chart has drawn another vertical line. The rally in stocks, Bitcoin, and cryptocurrencies will be epic," he suggested.
Vandell, the co-founder of Black Swan Capitalists, argues that global M2 movements directly impact Bitcoin prices. He points out that when global M2 decreases, Bitcoin and the cryptocurrency market tend to decline about 10 weeks later.
Despite the potential for short-term declines, Vandell believes this cycle lays the foundation for a long-term uptrend.
"When global M2 recently decreased, Bitcoin and cryptocurrencies followed with a decline of about 10 weeks. There is a possibility of further declines, but this decline is a natural part of the cycle. This liquidity change is likely to continue throughout the year and will set the stage for the next rally," Vandell explained.
Renowned analyst Michaël van de Poppe also considers M2 expansion as one of the five key indicators for an early market recovery. He emphasizes that inflation is no longer the primary focus and that expectations of interest rate cuts by the Federal Reserve are making financial conditions more favorable for Bitcoin.
"The conclusion is: Inflation is not the main topic anymore and is likely to decline. Fed rate cuts. The Dollar will see a significant weakening. Yields will decline. M2 supply will expand significantly. This process has started, so it's just a matter of time before altcoins and cryptocurrencies start rallying. It's a bullish setup," he stated.
Historical Context and Outlook
The correlation between Bitcoin prices and global M2 growth is not new. Macroeconomist Tomas recently compared the previous market cycles in 2017 and 2020, noting that the substantial increases in global M2 at the time coincided with Bitcoin's strongest annual performances.
"Money supply is expanding globally. The two major global M2 surges in the past occurred in 2017 and 2020, both coinciding with a mini 'everything bubble' and Bitcoin's strongest years. Could this repeat in 2025? It depends on whether the US Dollar sees a significant weakening," Tomas observed.
Tomas also emphasized the influence of central bank policies, suggesting that the strength of the US Dollar could be a limiting factor as major banks cut interest rates. If the US Dollar Index (DXY) falls below around 100, it could create conditions similar to previous Bitcoin bull markets.
The Role of the Fed
Macro researcher Yixin Shi believes the Fed could pause its quantitative tightening (QT) policy in the second half of this year. Shi says the Fed may switch to quantitative easing (QE) if the economic situation requires it. Such a shift could inject additional liquidity into the market, potentially fueling Bitcoin's uptrend.
"I think the Fed's desired level of reserves could become too thin by the second half of this year. I predict they will end QT by the end of Q3 or Q4 and then QE could be possible afterwards," Shi mentioned.
Tomas agreed that the Fed's current plan is to slowly expand its balance sheet in line with GDP growth. He also explained that major financial events could trigger a full-scale return to QE.
These perspectives suggest that uncertainty remains, including the strength of the US Dollar and potential economic shocks. However, the broad consensus among analysts points to an imminent upswing for Bitcoin.
Investors should closely monitor the predicted rally and continue to carefully examine macroeconomic indicators in the coming months, conducting their own research.
