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Bitcoin facing imminent global money supply rally, contrary to halving theory

Bitcoin facing imminent global money supply rally, contrary to halving theory

Bitcoin (BTC) is currently aiming to reclaim the $40,000 level as it seeks a new all-time high, primarily fueled by speculation surrounding the potential approval of a spot exchange-traded fund (ETF) by United States regulators.

The news regarding the ETF, combined with the upcoming halving event, is widely seen as a major catalyst that could propel Bitcoin to another record high. Nevertheless, some analysts posit that Bitcoin may receive a boost from an additional catalyst.

Particularly, in a TradingView post on December 1, renowned crypto analyst TradingShot suggested that Bitcoin might be on the verge of a significant global money supply rally, challenging traditional halving theory. Notably, the halving theory dictates that Bitcoin experiences important price rallies following each event. 

Bitcoin price analysis chart. Source: TradingView

The potential Bitcoin rally, as per the analyst, is closely tied to two key indicators of the global money supply: Chinese bond yields and the Chinese Yuan. The analysis examines the correlation between Bitcoin and these metrics, comparing them against the US Dollar, US balance sheet, Chinese Central Bank balance sheet, and the European Central Bank’s assets. 

According to TradingShot, Bitcoin historically bottoms when the Yuan trend-line does, and its parabolic rally starts when the Chinese bond yield trend-line hits a lower low. The current situation indicates an upward movement in the Chinese bond yield trend line after recently hitting a low.

“This is contrary to common belief and traditional Halving theory, but according to the above monetary metrics, BTC may just be starting a new parabolic rally much earlier than anticipated,” he said. 

Bitcoin targets $40,000

Indeed, Bitcoin has surged to its highest point since May 2022. The recent upswing in value has heightened the probability of the cryptocurrency reaching $40,000, making this year particularly exceptional for the pioneer digital asset.

Significantly, Bitcoin is undergoing an impressive 130% rebound from the challenges faced by cryptocurrencies in 2022. These gains stem from optimism surrounding potential interest-rate cuts by the Federal Reserve in the upcoming year, coupled with the anticipation of the US approving its first-ever spot Bitcoin ETF.

At the same time, after Bitcoin surpassed the significant psychological threshold of $38,000, most holders found themselves in a profitable position. According to a Finbold report, as of December 1, 85% of Bitcoin addresses were in profit, contrasting with 11% in loss and 4% at break-even, marking the asset’s highest profitability in over two years. 

Bitcoin price analysis

By press time, Bitcoin is trading at $38,755, showcasing daily gains exceeding 1%. Looking at the weekly chart, Bitcoin has experienced an almost 3% increase.

Bitcoin price analysis chart. Source: Finbold

Regarding technical analysis, the leading cryptocurrency is predominantly influenced by bullish sentiments. A one-day gauge summary leans towards a ‘buy’ signal at 14, while moving averages strongly suggest a ‘strong buy’ at 14. Meanwhile, oscillators favor a ‘sell’ signal at 2.

Bitcoin technical analysis chart. Source: TradingView

Given the market conditions and price movement, Bitcoin appears to be on its way to $40,000, a crucial level that could pave the way for a new record high.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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