Bitcoin’s price movement is drawing comparisons to the explosive growth seen in 2016-2017, as veteran Wall Street analyst Raoul Pal suggests that the Global M2 Money Supply may soon experience a significant recovery. This anticipated expansion could be a beacon of hope for investors wary of recent market fluctuations.

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Several analysts are keeping a vigilant eye on Bitcoin, predicting that it might dip to the $70,000 mark before resuming an upward trajectory due to looming macroeconomic challenges. The latest data, particularly after the January 15 Consumer Price Index (CPI) report, indicates a decline in speculative momentum surrounding Bitcoin, heightening concerns about potential volatility in the near future.

Despite these worries, Bitcoin’s price recently rebounded above $94,000 after dipping to $91,380 earlier today as the selling pressure eased. Pal, founder of Global Macro Investor, reassures investors that this current pattern mirrors that of 2016. He confidently states that “everything is going to be just fine,” indicating a belief that while there might be some minor dips, the long-term outlook remains positive.

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Pal’s commentary highlights a significant observation: while the Global M2 Money Supply has decreased over the past two years, Bitcoin’s price has not retraced sufficiently to indicate a definitive trend reversal. Historically, Bitcoin closely correlates with the M2 supply, leading some to project that a return to previous support levels could happen before a subsequent recovery.

The concerns within the investment community are underscored by the potential for a market consolidation phase, as analysts are already discussing the possibility of Bitcoin prices testing lower bounds before any upturn. However, Pal urges calm, drawing on previous patterns and suggesting that Bitcoin might not follow an identical route but will resonate with similar trends—from his perspective, a “rhyme” rather than an exact repeat.

Adding to the discussion, Chris Kuiper, Director of Research at Fidelity Digital Assets, reflects on the potential economic landscape, likening it to stagflation experienced in the 1970s. Kuiper points out that historical data indicates that both Gold and CPI saw significant rises following 1977, a trend he believes may be mirrored by Bitcoin this time around, characterizing it as “gold on steroids.”

As anticipation builds ahead of the upcoming CPI data release, Bitcoin faces potential volatility. Currently, it finds itself at a pivotal support level after correcting over 15% from its all-time highs. Prominent crypto analyst Rekt Capital emphasizes the need for Bitcoin to uphold the $91k Range Low to avert further setbacks.

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In the bigger picture, Bitcoin’s open interest suggests a decline in speculative activity. As reported by Glassnode, the market’s mid-term trend has reached a peak and is now trending downwards, indicating that many traders are closing positions amidst an atmosphere of uncertainty.

With both cautious optimism and apprehension present in the market, many eyes will be on how the Global M2 Money Supply plays into Bitcoin’s recovery narrative. Investors are encouraged to stay informed and consider the evolving dynamics as they navigate their cryptocurrency journeys.

This content is edited using AI

Source: coingape.com