Bitcoin Bull Run Smashes $94T Record

Bitcoin is set to extend its ongoing bull market due to an unprecedented level of global liquidity. Recent analysis shared on June 5 by Philip Swift, the founder of the on-chain data platform LookIntoBitcoin, indicates that worldwide liquidity is approaching $100 trillion. This surge in liquidity suggests favorable conditions for Bitcoin’s price surge.

Bitcoin and the broader cryptocurrency markets are known for their sensitivity to changes in global liquidity. As we move into 2024, these conditions appear to be increasingly favorable for a rise in BTC prices. According to Swift, who tracks the global M2 money supply and its relationship with Bitcoin’s price trends, the M2 money supply in U.S. dollar terms has now reached $94 trillion. This is an all-time high, eclipsing the amount during Bitcoin’s previous peak at $69,000 in late 2021 by $3 trillion.

After hitting a low of $85 trillion in late 2022, a period that coincided with the deepest part of the crypto bear market, M2 has bounced back by 10%. Swift noted this milestone in his commentary, suggesting that it could be a significant driver for the current bull market. “The most important chart for this bull run has just made a new all-time high,” he stated, urging investors to prepare for potential gains.

Supporting Swift’s analysis, other recent liquidity-based studies have also painted an optimistic picture for Bitcoin’s future. Specifically, data indicates that Bitcoin’s performance against the U.S. M1 money supply is beginning to break free from a seven-year consolidation phase, which is the longest in the cryptocurrency’s history. This breakout could have substantial positive implications for Bitcoin prices.

As financial conditions continue to relax, further analyses show a growing interest from institutional investors in cryptocurrency and other risk assets. The on-chain analytics platform CryptoQuant, in its latest “Weekly Report,” drew parallels with investor behavior observed in 2020. The report noted that large investors are injecting approximately $1 billion into Bitcoin, mirroring the conditions before the rally that saw Bitcoin soar from $10,000 to $70,000.

In 2020, Bitcoin hovered around the $10,000 mark for six months with significant on-chain activity, which later turned out to be over-the-counter (OTC) deals. CryptoQuant noted that even now, despite low price volatility, on-chain activity remains high. According to the report, new whale wallets – large accumulators of Bitcoin – are adding $1 billion daily, likely representing institutional investors moving their purchases into custody wallets.

An accompanying chart in CryptoQuant’s report compares the aggregate cost basis, known as the realized price, of new whale investors from 2020 to 2024. This comparison further underscores the similarities in investor behavior between the two periods, suggesting that the current conditions may be setting the stage for another significant rally.

CryptoQuant pointed out increasing inflows into U.S. spot Bitcoin exchange-traded funds (ETFs). On June 4, these ETFs recorded their second-highest net inflows, highlighting a growing demand among institutional investors for Bitcoin exposure via regulated financial instruments.

The combination of record-high global liquidity, increasing institutional interest, and historical parallels with past bull markets all point to a potential continuation of Bitcoin’s current upward trend. For investors, these indicators suggest that the current conditions are highly favorable for Bitcoin, potentially leading to significant gains in the near future.