Bitcoin has been moving upward again, and there are some that suggest it might reach $110,000 by January 2025. The forecast is tied to something called the Total Liquidity Index, which measures the amount of money major central banks are injecting into the global financial system.
Understanding the Prediction
The Total Liquidity Index, developed by Global Macro Investor (GMI), tracks the balance sheets of central banks around the world. These balance sheets show how much money is being added to the economy. Raoul Pal, the founder of GMI, has noticed that Bitcoin often follows the same trends as this index.
According to Pal, Bitcoin could reach $110,000 in January 2025, but this would likely be a temporary peak. He calls it a “local peak,” meaning the price might drop afterward before continuing its long-term movement.
There have been a lot of imitations of this chart going around with the wrong phasing. Here is the updated original from our work at Global Macro investor. You are welcome. pic.twitter.com/LcxOA3TEd5
— Raoul Pal (@RaoulGMI) November 29, 2024
When central banks increase the money supply—essentially putting more money into circulation—it often leads to more interest in high-risk investments like Bitcoin. This happens because people and businesses have extra funds to invest, and Bitcoin has historically performed exceptionally during these times.
What Could Happen Next?
After a potential peak in January 2025, Bitcoin’s price could fall below $70,000 by February. Despite this possible dip, analysts like Pal believe that the global money supply will keep growing, which could support Bitcoin’s value over time.
A key factor driving this prediction is the growth of the M2 money supply, which includes all the money held by people and businesses, such as savings and cash deposits. During periods of M2 expansion, Bitcoin has often experienced big price increases.
For instance, if the global money supply grows by $20 trillion, analysts estimate that up to $2 trillion of that could flow into Bitcoin. When there’s more money circulating, people are often more willing to explore investments like cryptocurrencies.
Global M2 bottomed at $94T in Q4 2022 and has since climbed to $105T. During this period, Bitcoin’s market cap 5x’ed, adding $1.5T. In other words, 10% of the new money supply has leaked from the fiat system into the emerging global reserve asset of Bitcoin (gold, equities etc… pic.twitter.com/w0vWIMufbg
— Jamie Coutts CMT (@Jamie1Coutts) November 28, 2024
Global liquidity, which refers to the total amount of money available in the financial system, is expected to reach its peak in 2026. Analysts suggest this could align with another major upward movement in Bitcoin’s price.
What Should You Take Away?
For those new to Bitcoin, predictions like this can be exciting but also a bit confusing. It’s important to remember that these forecasts are based on patterns observed in the past and aren’t guaranteed outcomes. Still, they provide insight into how economic trends, like changes in the money supply, can influence Bitcoin’s price.
Whereas $110,000 sounds great for Bitcoin, we still have the magical $100,000 barrier to break through. Let’s do that first and then look up again! Keep following us at HowToBuyBitcoin.org for all the latest news and updates on Bitcoin.