Raoul Pal, co-founder and CEO of financial media platform Real Vision, said that the increase in M2 money supply could push cryptocurrencies into another bull market rally and help them outperform traditional markets. Pal’s X post highlights the correlation between increasing fiat market supply and the start of a cryptocurrency bull run.
Pal shared a chart comparing the annual performance of Bitcoin (BTC) with the global M2 money supply in an X (formerly Twitter) post, showing that Bitcoin and global M2 supply have grown simultaneously. Historically, Bitcoin and cryptocurrency markets have begun to outperform traditional financial markets as the global supply of M2 increases.
The chart above shows that Bitcoin’s price is on the verge of decoupling from traditional markets as M2 supply increases, as has historically been the case, as evidenced by the surge in BTC performance in 2021, 2017, and 2014.
friend explain He “likes Global M2… BTC is outperforming NDX at this point and cryptocurrencies become super black holes.”
The total money supply (M2) is the Federal Reserve’s estimate of the amount of money in circulation. M2 supply includes all cash people own and all funds held in savings accounts, checking accounts and other short-term savings vehicles such as certificates of deposit (CDs).
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Bitcoin bull runs are typically associated with the block reward halving every four years, with the next bull run scheduled for April 2024 as this reduces the market supply of BTC in response to growing demand. However, the halving is not the only factor behind the surge, some macroeconomic factors also play a key role.
Over the past decade, the money supply (M2) has grown rapidly due to falling interest rates, quantitative easing, and fiscal stimulus, and the price of Bitcoin has risen sharply. Conversely, the cryptocurrency market has struggled to gain bullish momentum amid central bank tightening of monetary policy. The bull market in 2021 coincides with the Federal Reserve, European Central Bank, Bank of Japan, and People’s Bank of China increasing their total M2 money supply by 6% or more.
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