NAIROBI (CoinChapter.com)— A key Bitcoin bull signal has re-emerged for the first time in almost two years, sparking optimism among market observers for a potential price surge. The signal, part of the global liquidity model, has been historically correlated with substantial Bitcoin rallies, raising expectations for a substantial price movement.
Historical Precedence Suggests Strong Bitcoin Rally
Jamie Coutts, a chief crypto analyst at Real Vision, highlighted the re-emergence of this Bitcoin bull signal. His global liquidity momentum model (MSI) flashed a bullish regime signal, the first since Nov. 2023.
Coutts noted that similar signals in the past have led to notable Bitcoin rallies, including a 19-fold increase in 2017 and a six-fold surge in 2020.
Coutts estimates that Bitcoin’s price could surge to around $120,000, provided that certain conditions are met.
However, Coutts also cautioned that the bullish outlook heavily depends on the performance of the U.S. Dollar Index (DXY) and global liquidity trends. He suggested that the DXY would need to fall below 101 to facilitate a substantial rise in global M2 money supply, which could drive Bitcoin’s price higher.
Global Liquidity Trends May Influence Bitcoin’s Future
The potential for Bitcoin’s price to double hinges on global liquidity trends, particularly the expansion of the M2 money supply. Coutts noted that recent actions by central banks, such as the Bank of Japan and the People’s Bank of China, have contributed to a $1.2 trillion increase in the global money base. This expanding liquidity is a critical factor that could support Bitcoin’s upward momentum.
Nevertheless, the outlook for Bitcoin remains uncertain due to various market dynamics. For instance, the expiration of over $1.4 billion in Bitcoin options on Aug. 16 could introduce short-term volatility, potentially hindering the anticipated rally.
The Global Liquidity (M2) chart shows a notable expansion in global M2 since 2020, coinciding with Bitcoin rallies. This trend supports the argument that liquidity injections by central banks, as seen with recent actions from the Bank of Japan and the People’s Bank of China, impact Bitcoin’s price movements.
Bitcoin ETF Flows Turn Positive as Price Dips Below $56K
Bitcoin ETF flows turned positive on Aug. 15, with a total of $11.1 million in net inflows. This marks a reversal in sentiment following a period of mixed flows across various funds.
Fidelity led the inflows with $16.2 million, followed by Bitwise, which recorded $6.2 million in new investments. Additionally, the BTC fund saw $13.7 million in inflows, reflecting growing interest among institutional investors.
However, Grayscale’s GBTC witnessed $25 million in outflows, indicating some investors chose to exit positions during the recent price volatility. This outflow contributed to a downward pressure on Bitcoin’s price, which fell from $60,000 to $56,000 during the trading session.
Despite the decline, Bitcoin’s price recovered to $58,143.91 as of Aug. 16. The rebound, along with positive ETF inflows, signals potential market stabilization.
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