Bitcoin (BTC) Prepares for a Bigger Rally as M2 Money Supply Expands, Aims to Break Above 200-day MA

Bitcoin may be preparing for a bigger rally, though there may be barriers to break. The past quarter saw BTC move sideways.

Bitcoin (BTC) price action is yet to show signs of a strong rally, despite the expectations for ‘Uptober’ to propel BTC out of the latest price weakness.

Two weeks into the month, however, BTC growth is still lagging behind predictions and may be facing obstacles.

One factor that traders expected to boost BTC price is the latest M2 money supply growth.

However, BTC growth is lagging behind the trend, despite the continuous flow of global M2 supply.

Bitcoin price may be preparing for a bigger rally, but there are still barriers to break.

While BTC price moved sideways in the past quarter, global M2 supply continued to flow, especially after the path taken by the US Federal Reserve was quantitative easing.

In 2024, the M2 money supply started expanding again in April, rising from 103T to over 107T as the final stretch of 2024 approached.

BTC price continued with its range-bound sideways trading, while M2 money supply growth accelerated.

Most of the inflows for the past year occurred in the third quarter, while BTC price underwent several corrections and traded within a range.

Historically, BTC price has reacted favorably to growth in the M2 supply.

The metric indicates a move to easier liquidity, which could flow into riskier investments.

Now, BTC price is positioned even better to capitalize on the extra liquidity.

Both retail and corporate buyers could choose BTC, especially in anticipation of a move to a higher price range.

However, BTC price does not react immediately to a growing money supply.

One scenario is that quantitative easing has not started in earnest yet.

After the 2020 M2 expansion, BTC price did not react immediately and, in fact, lagged for years, especially after the crash of FTX.

Without a similar factor in 2024, BTC price may benefit from the M2 expansion, albeit lagging the trend by weeks or months.

BTC price aims to break above 200-day MAIn the short term, BTC price is yet to show signs of an imminent rally.

The 200-day moving average has been rejected several times in the past weeks.

As of October 14, BTC price finally broke out above $66,000, trading above the 200-day MA of $63,453.14.

A break above the 200-day MA is seen as a sign of a potentially bigger rally.

The latest price move broke a trend of price weakness, but the 200 MA indicator does not guarantee a parabolic rise.

In Q3, BTC price still managed to break above the trendline, only to go for a deeper correction soon after.

The question for BTC price remains whether bears will once again attempt to short the price levels and spark a maximum pain rally to liquidate the leveraged positions.

BTC price looks ready to break the trendBTC price seems ready for the real bull market to start – but there are still cautious traders that see the recent price moves as a bull trap.

BTC price still managed to break above the monthly falling wedge, signaling a potential breakout to a higher range.

BTC bull rallies are usually very fast, taking about 10% of the time on the market for the biggest gains.

The leading coin is still in the period of 18 months after its Halving, where the biggest and fastest gains can happen.

In the short term, BTC price is expected to make shallow retests of its lower levels, while breaking above $70,000.

The run-up to the US Presidential Elections is also a key factor for emerging enthusiasm and more irrational price moves.

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