According to a reputable expert, Bitcoin may retest its previous record high of $60,000. This optimistic outlook is the result of a careful analysis of Bitcoin’s price development, adjusted for the M1 money supply, which represents the total amount of readily usable deposits and actual cash in the economy.
Knowing M1 is essential. Physical money and coins, demand deposits, traveler’s checks, other checkable deposits, and negotiable order of withdrawal (NOW) accounts are included in this monetary tally. Due to the presence of assets and currencies that may be swiftly turned into cash, M1 is a measure of the money supply that comprises the most liquid parts of the money supply.
Since 2018, it appears that the price of bitcoin has been fluctuating, with crucial points emerging around $6,000 in 2018 and 2019, and $30,000 in 2021 and 2022. These pricing points may seem different at first look, but after being modified for variations in the M1 money supply, they may be seen as around the same level. A more realistic depiction of Bitcoin’s actual worth over time is given by this modification.
The M1 supply has increased significantly over the last four years as a result of several causes including government stimulus programmes and central bank activities. The perceived price levels change when we compare the price of Bitcoin to this expanded money supply. When compared to the $30,000 level observed in 2021 and 2022, the $6,000 level in 2018 and 2019 becomes the same.
The intriguing development is that, despite the M1 money supply having been shrinking for a year, Bitcoin appears to be regaining this adjusted level. This shows that Bitcoin is getting stronger in real terms and may be preparing for another bull run.
The $60,000 top may once more be in view if Bitcoin’s value increases relative to the M1 supply. This would be consistent with the opinions of some analysts who think that Bitcoin’s fundamentals are still solid and that the coin is poised for a major return.
