Global Money Flood Fuels Bitcoin Bull Run: Record High Liquidity Injects Optimism
Bitcoin’s ongoing bull run receives a potential boost as global liquidity reaches an unprecedented high. Analysis published on June 5th by Philip Swift, founder of on-chain data platform LookIntoBitcoin, reveals global liquidity nearing a staggering $100 trillion.
Bitcoin and cryptocurrency markets are well-known for their sensitivity to global liquidity trends. In 2024, these conditions appear particularly favorable for a continued rise in Bitcoin’s price. This is the conclusion drawn by Swift, whose platform tracks the world’s M2 money supply and analyzes its correlation with Bitcoin’s price movements.
The M2 money supply, measured in U.S. dollars, currently sits at a record $94 trillion. This surpasses the previous high and represents a $3 trillion increase over the period when Bitcoin reached its all-time high of $69,000 in late 2021. Significantly, since dipping to $85 trillion in late 2022 (coinciding with the depths of the crypto bear market), the M2 money supply has rebounded a full 10%.
“The most important chart for this bull run has just made a new all-time high,” declared Swift in his commentary. “Are you ready?”
This data aligns with other recent liquidity-focused studies, all reaching similarly bullish conclusions about Bitcoin’s future trajectory. For example, the comparison between Bitcoin and the U.S. M1 money supply is on the verge of breaking out of a seven-year consolidation period – the longest in Bitcoin’s history. This breakout has historically been associated with significant price increases.
Furthermore, as financial conditions become more relaxed, additional analysis suggests a growing appetite for crypto and other risk assets among institutional investors.
In its “Weekly Report” submitted to Cointelegraph, on-chain analytics platform CryptoQuant identified parallels with investor behavior in 2020. The report states, “Indeed, large investors are adding about $1 billion into Bitcoin, mirroring 2020’s activity before the rally from $10,000 to $70,000. Back in 2020, Bitcoin hovered around $10,000 for 6 months with high on-chain activity, later revealed to be over-the-counter (OTC) deals.”
The report continues, “Now, despite low price volatility, on-chain activity remains high, with $1 billion added daily by new whale wallets, likely through Bitcoin purchases from institutional investors entering into custody wallets.” An accompanying chart visually compares the aggregate cost basis (realized price) of new whales from 2020 to 2024.
CryptoQuant also highlighted a surge in inflows to U.S. spot Bitcoin exchange-traded funds (ETFs), recording their second-highest net inflows on June 4th.
The confluence of record global liquidity, historical price correlations, and resurfacing institutional interest all paint a potentially bullish picture for Bitcoin’s future. However, as with any investment, careful consideration and thorough research are crucial before making any financial decisions.
