Real Vision analyst Jamie Coutts believes Bitcoin (BTC) could be on the cusp of a massive rally based on one factor historically associated with bullishness.
Coutts says momentum in global liquidity is “starting to accelerate higher, ” offering the perfect bullish setup for Bitcoin.
The Real Vision analyst says that these conditions coincide with “all the froth from exchange-traded funds’ (ETFs) launches and excess leverage” leaving the Bitcoin market.
“Over the past decade, Bitcoin has had a tendency to trough several months before the bottom in global money supply. Then it rips, gets way ahead of the move in liquidity, and has a mid-cycle correction.”
According to Coutts, an increase in the global money supply is inevitable.
“In a debt-based fractional reserve financial system, the money supply must continually expand to support the outstanding debt. Otherwise, everything will collapse. This is the natural state.”
The Real Vision analyst says the strength or weakness of the US dollar as measured by the US Dollar Index (DX) also determines Bitcoin’s price direction. The US Dollar Index is a benchmark of the value of the US dollar compared to a basket of other widely traded global currencies. A DXY on an uptrend indicates a strengthening US dollar while a downtrending DXY indicates a weakening US dollar.
“BTC experiences the highest velocity upside move when the dollar breaks lower. If the DXY is weakening from here it’s being coordinated by the Federal Reserve and global liquidity is being injected.”
The DXY is currently at 102.55, down by approximately four percent from the 2024 high reached in April.
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