Historical Bitcoin market cycles have been closely tied to M2 money supply and expanding liquidity.

On Oct. 22, market analyst Michaël van de Poppe delved into data points and correlations with cycle peaks and money supply. He noted that in 2017, the M2 supply continued to expand significantly, and the cycle lasted until the end of the year, with BTC peaking at $20,000.

During the 2021 bull market, the M2 supply surged, and crypto markets followed, peaking in November that year. However, the money supply continued to expand into 2022 but markets were kept depressed that year due to interest rate hikes and the collapses of several high-profile crypto companies.

Money Supply Impacts

The analyst predicted that this cycle would be prolonged if the M2 money supply kept expanding for another year and a half.

“As a general thesis, if the M2 supply is expanded until mid-2026, the liquidity expansions will likely prolong the cycle.”

This chart shows a few super important data points that I think are important for this cycle.

– In 2016-2017 the M2 supply continued to expand significantly, through which the cycle lasted until the end of 2017.

– In 2021 the M2 supply basically went vertical, after which it… pic.twitter.com/z1QuikfbVG

— Michaël van de Poppe (@CryptoMichNL) October 22, 2024

The M2 money supply is a measure of the amount of currency in circulation. It includes M1 money, which is physical cash and deposits, in addition to currency that is “less liquid.”

It is currently growing at a rate of 2.59%, which has just surpassed the US inflation rate of 2.44%. Moreover, it has been increasing since the beginning of this year and is currently $21.2 trillion, according to the St. Louis Fed.

Market Strategist Charlie Bilello commented on the growth rate, stating, “After a brief hiatus, money printing is back.”

The US Money Supply grew 2.6% over the last year, the biggest YoY increase since August 2022. After a brief hiatus, money printing is back.https://t.co/l5IYmkeySJ pic.twitter.com/j9YdcpX2A0

— Charlie Bilello (@charliebilello) October 23, 2024

On Oct. 23, WeRate co-founder Quinten Francois also shared the M2 growth chart, exclaiming, “A tsunami of printed money is coming and will push BTC into 6 figures.”

Where to in The Short Term?

BTC has retreated around 3% from its multi-month high of $69,500 on Oct. 21 to trade around the $67,000 level, where support was holding during Asian trading on Wednesday morning.

Reflexivity Research co-founder Will Clemente observed that Bitcoin “is flipping last month’s highs into demand here,” suggesting that it could be forming a new support base to move higher.

I rarely post about low time frame TA/price action, but looks like BTC is flipping last month’s highs into demand here. pic.twitter.com/cyU1RweWx6

— Will (@WClementeIII) October 22, 2024

Meanwhile, ‘Daan Crypto Trades’ told his 389,000 X followers that he doubts there will be a new all-time high before the US election on Nov. 5 “unless Trump’s odds drastically improve and the ETF inflows keep coming in,” before adding that the “base case is still relatively choppy between $65K-$70K until the election.”