Due to the massive increase in M2 liquidity, especially in the United States, large investors will have enough funds to invest in new markets and stable investments. We will now explain to you what this means for Bitcoin (BTC). M2 money means first of all all the money in a country that falls under M1; this is the total available cash, as well as money in current accounts. At M2 there is also the so-called “Near Money”, which are all sources of money that can be converted into cash without great difficulty, such as savings deposits, certificates of deposit, money market paper (securities) and other time deposits.
Massive injection of liquidity possible
The experienced investor and founder of the investment company DTAP Capital, Dan Tapiero, predicts that the Bitcoin market will benefit from a massive injection of liquidity in 2021. He draws analogies from the observation that the S&P 500 index is chasing the US M2 money supply. Tapiero expects the U.S. M2 to surge by a staggering 40% in 2021, adding that investors will have enough liquidity to get into the stock, gold and bitcoin markets.
Mr. Tapiero interprets this as a positive sign for stocks, as well as for gold and Bitcoin
“Massive global liquidity will hit the markets next year,” he tweeted. “[The] graph suggests that the stock market will be threatened with a correction in the fourth quarter, followed by the biggest rally of our lives in the coming year 2021. Tremendous speed and near vertical price increase possible. [The market] could be led by gold this time. Bitcoin would also benefit from it. “
Heres the tweet: https://twitter.com/DTAPCAP/status/1291252534754062337
Mr. Tapiero’s analogy was based on a fluctuating positive correlation between US money supply and gold. A common understanding of finance is that a higher M2 offers investors enough liquidity to buy assets that they consider worthy to withstand inflation. This can be stocks, gold, bonds and also Bitcoin.