This Bullish Signal Suggests Bitcoin Could Surge 3x in This Cycle

A crypto researcher and analyst has identified a bullish signal that suggests bitcoin (BTC) could rally 3x in this bull cycle based on money supply from major central banks worldwide.

According to a tweet by Jamie Coutts, his composite global liquidity momentum model (MSI) flashed the bullish regime signal, which is historically correlated with major price rallies, for the first time since November 2023. 

Coutts explained that central banks are capitulating and liquidity “spigots” are opening, paving the way for BTC to go higher in the coming months. 

Bitcoin Could Rally 3x

Since July, the Bank of Japan and the People’s Bank of China have added $400 billion and $97 billion to the global money base, which has expanded by $1.2 trillion due to money additions by other banks. Coutts said the swift decline of the United States dollar also helped the credit increase, suggesting that the additions are coordinated with the Federal Reserve’s consent.

The analyst compared the current macroeconomic condition with similar stages in previous cycles and outlined the effects of such occurrences on BTC. In 2017, BTC surged 19x in the aftermath of an increase in the global money base. In 2020, the leading cryptocurrency rallied 6x due to the same factors. 

Coutts expects a 2-3x rally in this cycle if market dynamics follow the historical pattern. However, the U.S. dollar index (DXY) needs to be below 101 for BTC to meet this target. The ongoing central bank injections should propel this, driving global M2 (the measure of money supply readily convertible to cash) above $120 trillion in this cycle.

Furthermore, Coutts noted that his analysis is the natural state in a credit-based fractional reserve system, which entails that the money supply must continue to expand to support outstanding debt; otherwise, everything will collapse.

Previous Analysis Of Bitcoin’s Trajectory 

It is worth mentioning that when Coutts’ MSI model flashed the bullish signal in November 2023, BTC rallied 75% from then till April before the regime flipped bearish. Coutts predicted bitcoin’s correction after its all-time high in March, highlighting some macro headwinds that had turned negative and indicated upcoming corrections.

Regardless, he said the longer-term liquidity cycle remained favorable for BTC and the crypto sector.

Meanwhile, BTC was worth $59,200 at the time of writing. A manifestation of Coutts’ predictions could see the asset rally to $150,000-$180,000 at the peak of this cycle.