- M2 Money Supply’s positive trend suggests that increased liquidity could boost Bitcoin
- Despite this bullish signal, other metrics point to bearish pressure 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. At the time of writing, BTC was trading as high as $62,850. This uptick has seen the cryptocurrency’s price rise from $57,000 in just a few days. What this also means is that the cryptocurrency market trend may finally be changing for the better.
This positive development coincided with a revelation from the co-founder of Apollo Sats, who recently marked a significant shift in the M2 money supply. According to the director, the M2 money supply has now moved from negative to positive year-on-year, as of May 1.
Source:
This is a crucial update, pointing to an increase in monetary circulation, which has historically served as a precursor to increased investment in assets like Bitcoin during periods of rising inflation. Trader and financial author Oliver L. Velez commented recently about the same, stating:
M2 Money Supply is about to go ballistic like nothing has ever happened before. Can you say ‘Bŕrŕrrrr’? All I can say is: “tighten” and stack harder. All dips are for sale. Consider them gifts and ignore the bozos calling for doom. We are far from the end of BTC’s bull run.
Implications of the M2 Money Supply Shift to Bitcoin
The M2 money supply represents all cash and short-term bank deposits across the country. The move into positive territory is a classic economic indicator that often leads investors to focus on assets that historically perform well during periods of high inflation.
In the field of cryptocurrencies, such shifts have previously led to superior performance compared to traditional financial markets.
The latest positive adjustment in the M2’s supply has led to speculation among crypto traders about the potential for a long-term rally in Bitcoin’s price.
However, despite the optimistic outlook associated with the positivity of M2 supply, it is essential to consider other market indicators that continue to point to continued bearish pressure.
For example, a analysis from Glassnode revealed an increase in Bitcoin net outflows across all cohorts in April, indicating continued pressure on the sell side.
Source: Glassnode
Meanwhile, additional analysis of Bitcoin’s technical charts yielded a mixed signal. On the 4-hour chart, Bitcoin recently hit an order block, indicating a possible price reaction or reversal. This scenario was further supported by the formation of a bullish spinning candlestick pattern, followed by a bullish engulfing candle. This often precedes a change from bearish to bullish market conditions.
These chart formations suggest that while immediate bullish moves are possible, broader market sentiment remains cautiously optimistic.
In fact, cRypto analyst Ali Martinez recently reinforced this sentiment by hThis indicates a recent buy signal from Bitcoin’s market value to realized value ratio (MVRV).which adds a new layer of insight to the current market dynamics.