Bitcoin Halving Executes, Defying Era of Money Printing and Currency Debasement With ‘Quantitative Tightening’

April 20, 2024 The Daily Hodl

Rising M2 money supply will see crypto become ‘Super Massive Black Hole’: Raoul Pal

October 31, 2023 Coin Telegraph

Historically, the cryptocurrency market has benefited from the rise in global money supply, as the majority of bull runs in the past coincided with the rise in fiat supply.

The rising total money supply (M2) could propel crypto into another bull rally and help it outperform the traditional markets, according to Raoul Pal, co-founder and CEO of financial media platform Real Vision. Pal’s X post highlighted the correlation between the rising fiat market supply and the start of the crypto bull run.

Pal, in an X (formerly Twitter) post, shared a graph comparing Bitcoin’s (BTC) yearly performance against the global M2 money supply, indicating the simultaneous rise of Bitcoin and global M2 supply. Historically, the Bitcoin and cryptocurrency markets have started outperforming the traditional financial markets with a rise in global M2 supply.

*Bitcoin vs. global M2 supply. Source: Global Macro Investor*

The chart above shows that Bitcoin’s price is on the verge of decoupling from the traditional market with a rising M2 supply, which has been the case historically, as evident from the spike in BTC’s performance in 2021, 2017 and 2014.

*Bitcoin/NDX vs. global M2 supply. Source: Global Macro Investor*

Pal said he “loves Global M2... this is when BTC outperforms the NDX and crypto becomes the Super Massive Black Hole.”

The M2 is the amount the United States Federal Reserve estimates to be in circulation; it comprises all cash that people own and all money placed in savings accounts, checking accounts and other short-term savings instruments like certificates of deposit.

A Bitcoin bull run is often linked to the block reward halving every four years, with the next one scheduled for April 2024, as it reduces the market supply of BTC against growing demand. However, the halving is not the sole factor behind the surge, as several macroeconomic factors also play a key role.

Over the past decade, Bitcoin’s price has made significant gains during the fast growth of M2, owing to a reduction in interest rates, quantitative easing and fiscal stimulus. On the contrary, during times of monetary tightening by central banks, the cryptocurrency market has struggled to gain bullish momentum. The 2021 bull market coincided with 6% or higher aggregate M2 growth at the Fed, European Central Bank, Bank of Japan and People’s Bank of China.

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Why the 2024 Bitcoin halving may play out differently than in the past

October 19, 2023 Coin Telegraph

Bitcoin Halving

While the halving event is considered one of the main catalysts for Bitcoin bull markets, it may play out differently next year.

The impact of the Bitcoin halving on crypto prices is often overestimated and the next halving, set for April 2024, may play out differently than previous ones, according to a leading analyst.

The halving event, which every four years, cuts in half the rate by which new Bitcoins are created, and is generally considered one of the main catalysts driving Bitcoin’s biggest upside moves.

Despite the bullish narrative surrounding the halving, however, the event by itself does not guarantee the appreciation of Bitcoin.

If the reduced supply of new Bitcoin is not accompanied by significant demand, prices are unlikely to surge.

Also, the halving is an entirely predictable event: that means all market participants know in advance when it will occur and therefore its current price may already be reflective of the halving's impact before it happens.

“Things that we most anticipate generally don't happen,” said Bloomberg analyst Mike McGlone, commenting on the much anticipated event.

“And that's what I'm concerned about. It's complete consensus,” he continued.

Also, each time the halving occurs, its impact on the new Bitcoin supply decreases; over time, its impact will eventually become irrelevant. Changes in demand, rather than supply, are therefore becoming the dominant factor influencing the price of Bitcoin.

So, how will the next Bitcoin halving impact the crypto market? And, if not the halving, what is the catalysts behind Bitcoin’s cyclical upside moves? To find out, check out our latest Cointelegraph Report on our YouTube channel and don’t forget to subscribe!

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