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Bitcoin may experience a potential rally next week, influenced by expected increases in liquidity from the Federal Reserve. Arthur Hayes, former CEO of the BitMEX cryptocurrency exchange, recently closed his short position on Bitcoin. Initially, Hayes had anticipated a correction below the $50,000 mark and opened a short position to capitalize on this anticipated downturn.
Hayes now suggests that {Bitcoin} (BTC) price could surge in the near future due to a potential increase in liquidity in the U.S. economy. This expectation is linked to possible actions by the Federal Reserve in response to current economic and financial market conditions.
The potential liquidity injection could positively impact cryptocurrency sentiment and Bitcoin’s price trajectory. Jamie Coutts, chief crypto analyst at Real Vision, points out that changes in the M2 money supply—a measure of cash and short-term deposits—might play a crucial role in this scenario. According to Coutts, Bitcoin’s price often correlates with shifts in M2 momentum rather than its nominal value. In May, the M2 money supply showed a positive year-over-year change for the first time since November 2023, which may signal an increasing interest in assets like Bitcoin as a hedge against inflation.
Despite recent market concerns about a potential correction, Bitcoin’s September performance aligns with historical trends. Analyst Rekt Capital notes that September has traditionally been a month of downside volatility for Bitcoin, with average returns typically negative. Data from CoinGlass supports this observation, indicating an average return of -4.69% for Bitcoin in September.
Overall, the combination of potential liquidity injections and historical patterns of Bitcoin’s performance in September suggests a complex interplay of factors that could influence Bitcoin’s price movements in the coming weeks.
