Bitcoin is once again on the rise. After the cryptocurrency saw a decline of around 30 percent since the end of January and hit a low in April, it has since entered a noticeable recovery. The price has increased by almost 40 percent within just a few weeks. One of the triggers for the price weakness was the uncertainty caused by trade policy measures from former U.S. President Donald Trump. Investors have since become significantly more optimistic.
One factor supporting this optimism is the growing demand for Bitcoin ETFs. According to current market observations, these have been seeing net inflows again for several weeks. At the same time, more and more companies are adding Bitcoin to their balance sheets, including the company Strategy. From a technical perspective, analysts also see signals pointing to further price increases. A key focus is the formation of the so-called "Golden Cross," where the 50-day moving average crosses above the 200-day moving average – a signal many investors interpret as an indicator of an impending upward movement.
Another aspect gaining traction in trading forums is the close correlation between the Bitcoin price and the global money supply M2. This includes, among other things, cash and short-term deposits. Between May 2013 and July 2024, the correlation stood at 0.94, indicating a nearly synchronized movement of both variables. When the money supply expands, the Bitcoin price tends to rise with a time lag. On the other hand, rising interest rates or restrictive monetary policies tend to dampen price development.
Experts such as Julien Bittel and Ha Duong consider it likely that this dynamic will continue. Based on current data, Bitcoin could surpass the $110,000 mark as early as June. Later in the year, some market analysts consider prices of up to $140,000 conceivable. Portfolio manager Duong even sees a potential rise to $250,000 within a year. At the same time, he warns of setbacks that could amount to around 30 percent.
A central argument among Bitcoin advocates is the limited availability of the cryptocurrency. According to its algorithm, no more than 21 million coins can ever exist. In addition, the new supply of Bitcoin is halved every four years. Combined with the increasing money supply, many see this as a lasting source of demand potential for Bitcoin.
