The price of Bitcoin has surged over 58% since May, when the M2 money supply (an estimate of all cash and short-term bank deposits in the U.S.) turned positive year-on-year for the first time since November 2023.
The first cryptocurrency fell short of its historical high of $100,000 by just $200, or 0.2%, on November 22. This was followed by a correction of more than 7%, which some analysts believe could lead to a drop in Bitcoin by up to 30%.
However, according to Jamie Coutts, the chief crypto analyst at Real Vision, the increase in global money supply and a potential reversal in the U.S. Dollar Index (DXY) will set the stage for a BTC rally in 2025. Coutts previously stated that the M2 money supply is key to Bitcoin's next rally due to its historical correlation with the price of the digital asset.
At the beginning of May, the M2 money supply turned positive year-on-year for the first time since November 2023. This prompted investors to start looking for inflation hedges like Bitcoin, which has soared 58% since the change in money supply to positive.