Bitcoin [BTC] Path Forward May Depend on the US Money Supply

Bitcoin [BTC] has been in a price consolidation range between $60K and $70K for weeks, a boring set-up for speculators who thrive on volatility.

Bitcoin [BTC] has been trading within a narrow price range for weeks, a dull development for speculators who prefer high volatility.

This sideways movement began after the April halving event and the lack of demand for US spot BTC ETFs.

However, a new narrative is emerging for the king coin — the rising US money supply.

Bitcoin’s path forward

According to X user (formerly Twitter) TechDev_52, an entrepreneur and crypto analyst, BTC could be primed for a ‘blowoff’ move after BTC vs. M1 liquidity hit a record high.

‘$BTC had no business setting new highs in 2021. M1 soared to record highs, but #bitcoin couldn't set one against it. Now that it's broken above its 2M supertrend, we're likely in for that blowoff move it's always signaled.’

Source: X/TechDev_52

The analyst attributed the lack of a ‘blowoff’ in 2021 to the ‘COVID panic M1 liquidity,’ when BTC displayed a similar breakout against the money supply.

For the uninitiated, M1 liquidity measures the most liquid portion of the money supply. It includes currency and any assets that can be quickly converted to cash. In contrast, M2 includes some ‘less liquid parts’ of the money supply, such as savings deposits.

Interestingly, another analyst, Willy Woo, highlighted a 0.7% expansion in M2. In previous cycles, an increase in the money supply has led to a rise in BTC’s value in USD terms.

It remains to be seen whether the BTC’s breakout against M1 liquidity and M2 expansion will propel it to break out of the range.

However, recent data showed that leveraged funds hit record BTC short positions, possibly indicating a hedge against any potential BTC drop or bets on a price correction.

Source: X/ZeroHedge

Meanwhile, a short-term move towards $70.5K was more likely after sweeping the liquidity at $68.4K.

According to Coinglass data, both levels, marked orange, were key liquidity cluster points that could attract price action.

Source: Coinglass