Bitcoin to Hit $400K? Analyst Links Crypto to Money Supply

Bitcoin's price recently hovered between $108,000 and $110,000, exhibiting a surprising stability despite previous volatility. Analyst Kyle Chassé posits a correlation between Bitcoin's price and the global M2 money supply, suggesting a 90-day lag. His analysis, based on Bitstamp exchange data matched with three-month-shifted M2 data, indicates that increases in global liquidity often precede Bitcoin price rises after approximately 90 days. This model suggests a potential explanation for Bitcoin's price movements in early 2024. The rise in global M2 from roughly $98 trillion in early 2023 to over $108 trillion by early 2024, followed by a period of slower growth and Bitcoin's price dip below $80,000, supports Chassé's theory. With M2 now exceeding $111 trillion, Chassé projects a Bitcoin price surge to $400,000—a 270% increase from its current level—if this growth continues. He claims this potential is “coded” into the system. However, other experts caution that money supply isn't the sole determinant of Bitcoin's price. Factors such as real interest rates, policy changes, and on-chain signals also play significant roles. A hawkish shift by central banks, for example, could negatively impact Bitcoin's price regardless of M2 growth. Global Macro Investor reports suggest a 12-week lead time for M2's influence on Bitcoin. Therefore, any slowdown in M2 growth could result in Bitcoin price stabilization or correction, while a surge in liquidity could potentially trigger new highs. In conclusion, while the relationship between money supply and Bitcoin price offers valuable insight for long-term trend analysis, it shouldn't be the sole basis for short-term trading decisions.

(Source: https://www.newsbtc.com/news/bitcoin/400k-bitcoin-analyst-says-its-not-a-dream-its-coded/)