• A key Bitcoin bull signal has flashed for the first time in nearly 2 years, signaling a potential price breakout
• This bullish signal was historically correlated with a 19-fold Bitcoin rally in the 2017 cycle and a 6-fold rally in the 2020 cycle
• The analyst expects Bitcoin to potentially increase by over two-fold based on this signal, depending on factors like the US Dollar Index and global liquidity
A key Bitcoin bull signal has flashed for the first time in nearly a year, signaling a potential price breakout. This could lead to a significant rally for the price of Bitcoin.
Bitcoin Price Could Double Based on Historical Precedent
The global liquidity model’s bullish Bitcoin signal was shared by Jamie Coutts, a chief crypto analyst at Real Vision. Coutts expects Bitcoin to go much higher based on this signal. He wrote in an Aug. 15 post that his “composite global liquidity momentum model (MSI) has provided the first Bullish regime signal since November 2020.”
Coutts notes that Bitcoin rallied 75% from Nov. to April before the regime flipped Bearish. This same bullish signal preceded a 19-fold Bitcoin rally in the 2017 cycle and a six-fold rally in the 2020 cycle according to Coutts.
Bitcoin Price Target Around $120,000
The bullish signal could translate into a two to three-fold increase in Bitcoin price according to Coutts’ estimates. However, this is largely dependent on the performance of the US Dollar Index (DXY) and overall global liquidity, explained Coutts.
“For BTC to meet this target, the DXY would need to be well below 101 – prompted by ongoing central bank injections. This would push global M2 well over $120T this cycle,” wrote Coutts.
Short-Term Headwinds Remain
However, Bitcoin prices may face headwinds in the short term. Over $14 billion worth of Bitcoin options are set to expire on Aug. 16 at 8:00 am UTC, unless Bitcoin can stage a recovery above $60,000.
Expanding Money Supply Supports Bitcoin Bull Case
The continually expanding global M2 money supply could help Bitcoin break out above $60,000. During the past month, the Bank of Japan added $400 million while the People’s Bank of China added $97 billion worth of credit to the global money base, which expanded by $12 trillion according to Coutts.
Coutts believes this trend is likely to continue due to the economics of the fractional reserve system. “This is the natural state in a credit-based fractional reserve system. The money supply must continually expand to support the outstanding debt. Otherwise everything will collapse,” he wrote.
However, Bitcoin’s price action will greatly depend on the inflows from the US spot Bitcoin exchange-traded funds (ETFs), which have recently been stagnating. Following two consecutive days of positive inflows, ETF inflows turned negative on Aug. 14 as the US ETFs saw a cumulative $81 million worth of negative outflows.
