Bitcoin is switching back into rally mode. One thing in particular suggests that the cryptocurrency could set off on a new record chase.
(Philipp Frohn
17.05.2025 - 18:37)
Bitcoin is back. After the price of the cryptocurrency had fallen by a good 30% to as much as 75,000 dollars at its peak since the end of January, it is now back in full swing. Since its low point in April, when Donald Trump surprised the world with his tariff chaos, it has gained almost 40 percent in value.
Some market observers believe that it is only a matter of time before Bitcoin recaptures its old record high of just over 109,000 dollars from the beginning of the year. In fact, there is a lot to suggest this. Bitcoin ETFs have been recording increased net inflows again for weeks and more and more companies are starting to build up Bitcoin holdings - led by the software group Strategy (formerly Microstrategy).
Two developments in particular now suggest that Bitcoin could continue its new record run. Firstly, there is the chart technique. Investors try to make statements about future developments by taking past price patterns into account. At the moment, a pattern is forming in the Bitcoin price in which investors see the starting signal for further price gains: a "golden cross".
This is when the 50-day line crosses the 200-day line from bottom to top. The short-term upward momentum breaks through the longer-term trend - an indicator for chart technicians that prices will continue to rise. Just a few weeks ago, the opposite picture had formed in the Bitcoin price, namely a "death cross". However, the feared further downward pull was limited.
Bitcoin supporters are currently paying even more attention to a chart (see below) that is circulating on trading forums. It shows how Bitcoin and the global money supply are developing in relation to each other. The M2 money supply is defined as cash, sight deposits and short-term time deposits. The picture is clear: if the global money supply increases, Bitcoin will follow, summarizes Ha Duong, portfolio manager of the Berlin-based asset manager BIT Capital in the WirtschaftsWoche podcast "Bitcoin & Beyond".
The history of the cryptocurrency proves the theory right - at least in retrospect: There is a strong correlation between Bitcoin and the money supply. From May 2013 to July 2024, this was around 0.94. In other words, both curves move almost in sync. An increase in the money supply is followed by an increase in the price of Bitcoin with a delay of around twelve weeks. If, on the other hand, central banks or the banking system in general withdraw liquidity from the market, for example through higher interest rates, the Bitcoin price tends to fall.
Many market observers assume that this trend will continue. Julien Bittel, Head of Macro Research at Global Macro Investor, says that a comparison between the M2 money supply and the Bitcoin chart "still tells the same story: it's going up".
Correlation is not causation. The fact that bitcoin is now also following the money supply is therefore not a law of nature. However, if the lockstep continues, investors could possibly enjoy new record highs in the coming months. According to data from LSEG Datastream and Global Macro Investor, Bitcoin could reach the level of 110,000 dollars as early as June. That would be a new record.
Will Bitcoin now rise to 250,000 dollars?
What's more, a Bitcoin price of more than 140,000 dollars would be possible in the further course of the year. Compared to the current price, a price increase of a good 40 percent would therefore be conceivable. Portfolio manager Duong goes one better: "A price increase of 50 to 150 percent within twelve months remains possible."
This would correspond to a Bitcoin price of between 150,000 and 250,000 dollars - not only for reasons of monetary theory, but also because institutional adaptation continues to progress. In the event of a renewed correction, Duong anticipates a maximum setback risk of 30 percent. The correction that occurred after the last record high at the end of January and lasted until mid-April was also in this range. One reason for possible setbacks: high price levels tempt some investors to take profits.
"While equities are increasingly reliant on earnings growth, Bitcoin and co. react more directly to global monetary effects," summarizes Duong. Behind this is the narrative of Bitcoin as "better money". Central banks can print money and determine how much it is ultimately worth through interest rate hikes - Bitcoin, on the other hand, is unchangeable and deflationary.
The Bitcoin algorithm ensures that there will never be more than 21 million digital coins. In addition, the new supply of Bitcoin halves every four years. If demand remains the same or even increases, the Bitcoin price will inevitably rise.
The situation is different with conventional currencies, so-called fiat currencies. Since 2000 alone, the global money supply M2 has more than quadrupled - mainly because it is constantly being expanded due to constant refinancing requirements, says Duong. The USA in particular demonstrates this impressively: according to the International Monetary Fund, the mountain of debt is likely to rise to 37.6 trillion dollars this year and even to 46.7 trillion dollars by 2029. Compared to last year, this would be an increase of 6.5 and 32.3 percent respectively. Good conditions for Bitcoin.
