$95 Trillion in Global Liquidity: What it Means for Bitcoin

Global liquidity has reached a new all-time high of $95 trillion, according to the latest data. Financial analysts and crypto enthusiasts are watching closely, as the rise in global liquidity has historically shown a connection to changes in Bitcoin’s price.

The chart visually demonstrates the global M2 money supply and its relationship with Bitcoin’s price. As of August 25, 2024, Bitcoin’s price was $64,266, steadily climbing alongside the expansion of global liquidity.

The M2 money supply, often referred to as global liquidity, includes cash and checking deposits and is easily convertible into money. A jump in global liquidity usually means there is more money available in the economy, which can push up asset prices, including cryptocurrencies like Bitcoin. Historically, periods of growing global liquidity have lined up with major bullish runs in the crypto market.

Bitcoin, often considered a hedge against inflation and currency devaluation, tends to attract investors during times of increased money supply. As central banks worldwide continue easing monetary policy to stimulate economic growth, the surge in liquidity has created a fertile ground for Bitcoin’s price to rise.

This latest surge in global liquidity comes as worries about inflationary pressures and economic uncertainty persist. Investors are increasingly turning to alternative assets, like Bitcoin, to safeguard their wealth from market swings. The cryptocurrency’s fixed supply of 21 million coins and decentralized nature make it even more attractive in an environment of expanding money supply and potential currency debasement.

With Bitcoin hovering around the $64,000 mark, market observers are glued to its next move. The correlation between global liquidity and Bitcoin’s price hints that the cryptocurrency could keep climbing if liquidity levels stay high or continue to grow.

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