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Global monetary policy: This is how it influences the Bitcoin price!
Learn how global monetary policy affects the Bitcoin price and the role of the M2 money supply.
Global monetary policy: This is how it influences the Bitcoin price!
In recent months, the correlation between the M2 money supply and the Bitcoin price has increased significantly. This is particularly evident in the data from the major financial markets, which point to the influence of global monetary policy. An increase in the M2 money supply is often accompanied by a delayed increase in the price of Bitcoin, highlighting the importance of liquidity for the crypto market. Loud IT Boltwise This was particularly noticeable in mid-2023, when the money supply increased sharply and the Bitcoin price followed suit. This dynamic suggests that investors should carefully monitor how the money supply affects the Bitcoin market.
The money supply M2 measures the total money supply in an economy and includes cash holdings as well as short-term deposits and savings deposits of households and companies in banks. The correlation between M2 money supply and Bitcoin price shows a high value of 0.94, as per data from The investment emerges. This close relationship suggests that an expansion of the M2 is often viewed as positive for the Bitcoin price.
Price history and technical analysis
Economic indicators, however, show mixed signals. Inflation is slightly increased by the consumer price index PCE, which rose by 0.3% in February. At the same time, the U.S. unemployment rate rose to 4.1%, above expectations, and employment numbers fell below expectations. These uncertainties in the economy could affect liquidity in the financial system and market sentiment towards risky assets such as Bitcoin.
Influence of monetary policy and future developments
The role of central banks and their monetary policy remains crucial for the development of Bitcoin prices. The Federal Reserve's upcoming press conference on March 19 could provide important clues to future interest rate decisions and influence M2 performance. Historically, Bitcoin price follows global liquidity, but as demand from institutions and governments grows, the dynamic could change.
The ongoing correlation between Bitcoin and the M2 money supply could be reinforced by various factors. On the one hand, Bitcoin continues to be viewed as a high-risk asset that is sensitive to global liquidity shifts. On the other hand, Bitcoin's geographical distribution could mean that local liquidity shifts have less impact on the price than in the past. This could mean that Bitcoin's stability could increase despite fluctuating economic conditions.
In summary, the development of the M2 money supply and the global economic environment will continue to shape the Bitcoin market. Investors should closely monitor the interactions between these factors in order to adjust their strategies.