Here’s when Bitcoin (BTC) could catch the bottom and perform well, according to macro guru Lyn Alden
Closely watched analyst Lyn Alden says a macroeconomic factor could signal the end of Bitcoin’s (BTC) bear market.
In a new interview with market analyst Alessio Rastani, Alden says Bitcoin’s performance is closely correlated with the expansion or contraction of the global money supply (M2).
M2 money supply broadly refers to the total amount of currency in circulation, plus near-money, or highly liquid non-cash assets that can be easily converted into cash.
“When the global money supply in terms of dollars is growing quite quickly, it’s a great environment for Bitcoin. When it goes down, when basically the year-over-year rate rolls over or even stops growing altogether, it’s usually a pretty bad environment for Bitcoin. And in that sense, what Bitcoin ensures is not price growth, but monetary inflation, or debasement. It’s basically one of the more pure plays on liquidity.
That is probably the most important thing to look at. What happens to liquidity, and what happens to the rate of change in economic growth?
I think when you have declining liquidity and economic slowdown, yes, you would expect Bitcoin to do pretty badly, which we’ve seen especially in the last six months. So when you have a trough of liquidity, monetary easing and you’re in the middle of the recession maybe showing up, that’s when I expect Bitcoin will probably bottom out and do pretty well.”
Macro guru Raoul Pal shares exactly the same sentiment. Last month, Pal said that the crypto markets are largely driven by the liquidity that comes from the M2 money supply.
“Crypto is not driven by the business cycle, but it is driven by global liquidity.”
At the time of writing, Bitcoin is exchanging hands for $23,859, up 2.82% on the day.
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