Key Points
- The US money supply uptick could potentially trigger a rise in Bitcoin’s value.
- However, a spike in short positions against Bitcoin raises concerns of a possible price correction.
Bitcoin’s Market Movement
Bitcoin [BTC] has been fluctuating between $60K and $70K for several weeks, resulting in a lack of excitement for speculators who thrive on volatility.
This trend continued after the April halving event and the seemingly unchanged demand from US spot BTC ETFs.
However, a new narrative for the King coin is developing with an increase in the US money supply.
Bitcoin’s Potential Path
According to TechDev_52, an entrepreneur and crypto analyst, BTC might be on the verge of a ‘blowoff’ after BTC vs. M1 liquidity hit a record high.
The analyst attributes the absence of a ‘blowoff’ in 2021, when BTC showed a similar breakout against the money supply, to the ‘COVID panic M1 liquidity’.
M1 liquidity monitors the most liquid portion of the money supply, including currency and assets that can quickly be converted to cash.
Interestingly, M2, which includes less liquid parts of the money supply like savings deposits, has also expanded by 0.7%, according to analyst Willy Woo.
In previous cycles, a surge in the money supply led to an increase in BTC’s value in USD terms.
It remains uncertain whether the BTC’s breakout against the M1 liquidity and M2 expansion will push it above the range.
However, recent data revealed that leveraged funds have reached record BTC short positions, which could be a hedge against any potential drop in BTC or bets on price correction.
In the short term, a move towards $70.5K seems more likely after sweeping the liquidity at $68.4K.
According to Coinglass data, both levels, marked orange, are key liquidity cluster points that could influence price action.
