Number of factors, including an expanding global money supply and a potential decline in the value of the US dollar, have contributed to Bitcoin’s spectacular gain over the last three months. As Bitcoin approaches a six-figure price, economists predict that these characteristics will fuel a big rally by 2025.
Since May, Bitcoin’s price has risen by more than 58%, thanks primarily to a shift in the M2 money supply, which went positive for the first time since November 2023. This move has pushed many investors to seek inflation hedges, and Bitcoin has emerged as a popular option. Although Bitcoin just saw a 7% dip, falling just short of its all-time high, analysts remain bullish about the cryptocurrency’s long-term prospects.
According to Jamie Coutts, chief crypto analyst at Real Vision, the weakening of the US dollar and an increase in global money supply will be critical in propelling Bitcoin growth. The US Dollar Index (DXY), which tracks the value of the dollar, is exhibiting symptoms of peaking, which Coutts believes could create ideal conditions for risk assets such as Bitcoin.
The M2 money supply, a fundamental economic indicator that measures the amount of cash and short-term deposits in circulation, has historically been associated with Bitcoin price changes. As the US Federal Reserve appears to be expanding the global money supply to more than $127 trillion by 2025, Bitcoin’s price could skyrocket, with some predicting it would exceed $132,000.
We also expect political changes, like Donald Trump’s victory in the recent US presidential election, to benefit bitcoin. Analysts believe Trump’s administration will create a more favorable regulatory climate for cryptocurrencies, increasing market confidence and investor interest.
Bitcoin popularity continues to increase, with daily active addresses approaching one million for the first time since 2019. This increased activity, paired with institutional investments such as MicroStrategy’s ongoing Bitcoin acquisitions, supports the cryptocurrency’s bullish outlook.
As the US currency falls and global liquidity expands, Bitcoin appears poised for a significant gain in 2025. With rising usage, favorable macroeconomic conditions, and political upheavals, Bitcoin may experience extraordinary growth in the coming year.
