- Increased M2 money supply might influence Bitcoin’s price, suggesting that shifts in liquidity could forecast market movements.
- Historical patterns show Bitcoin often recovers after September slumps; for instance, a 39% rise followed a 7% fall in 2021.
Arthur Hayes, closed his short position in BTC, indicating a potential shift in market expectations.
Initially, Hayes predicted a drop in Bitcoin’s price below the $50,000 mark, leading him to open a short position over the weekend of September 6. His outlook was based on anticipated market corrections.
Closed my $BTC short, made 3% profit, enough to cover my food and bar tab for KBW. With Bad Gurl Yellen watching mrkts and releasing a weekend statement, if stuff continues to puke next week $BTC *MIGHT* rise anticipating more $ liq.
— Arthur Hayes (@CryptoHayes) September 8, 2024
Hayes had reversed his position, securing a 3% profit, which he mentioned would cover his personal expenses for an upcoming event.
In a public post, he speculated that if the market continued to decline, there might be an intervention by Janet Yellen, the U.S. Treasury Secretary, referred to in his post as “Bad Gurl Yellen”.
Bad Gurl Yellen is watching, if markets go down more she will definitely pump up the jam by printing more money. pic.twitter.com/L81vc07as9
— Arthur Hayes (@CryptoHayes) September 7, 2024
Hayes suggested that such interventions could lead to an increase in U.S. dollar liquidity, which might, in turn, boost Bitcoin’s value as early as the following week.
Further discussions on market liquidity were noted by Jamie Coutts, chief cryptocurrency analyst at Real Vision. Coutts emphasized the correlation between the M2 money supply—comprising cash and short-term bank deposits—and Bitcoin’s price movements.
📊 Global Money Supply and #Bitcoin
Its attempting to punch through multi-year resistance. Some thoughts from my recent piece @RealVision
— Jamie Coutts CMT (@Jamie1Coutts) May 16, 2024
He pointed out that the velocity of M2 changes is more indicative of potential market movements than the absolute values of M2.
Despite the current market sentiment categorized as “extreme fear” due to Bitcoin’s recent drop below $50,000, historical data provided by cryptocurrency analyst Rekt Capital shows that such corrections are typical for September, historically Bitcoin’s most volatile month.
When Bitcoin retraced -7% in September in 2017…
Bitcoin rallied +47% in the following October
When BTC retraced -7% in September in 2020…
BTC rallied +27% in the following October
When BTC retraced -7% in September in 2021…
BTC rallied +39% in the following… https://t.co/sBgeS2Lafi pic.twitter.com/5N3T9wwatG
— Rekt Capital (@rektcapital) September 6, 2024
Rekt Capital noted that similar declines in past years were followed by strong recoveries, exemplified by a 39% increase in October 2021 after a 7% drop the previous month.
This backdrop of potentially increased liquidity and historical recovery patterns suggests that Bitcoin might experience an upward trajectory in the near term, contingent on broader economic actions, particularly those involving monetary policy adjustments by the Federal Reserve.
