Crypto regulation shifts as Bitcoin eyes $105K amid liquidity boost
Bitcoin’s price action has recently captured the attention of investors, experiencing an 8% rise from a low of $76,703 on March 11. This upswing has been largely attributed to substantial buying from large-scale investors who have leveraged margin positions on platforms like Bitfinex. Over 17 days, margin longs on Bitfinex surged, reaching levels not seen since November 2024, with an impressive addition of 13,787 BTC, pushing the total margin long position to approximately $5.7 billion. This aggressive stance among traders signals an underlying belief in Bitcoin’s potential for further gains despite short-term volatility.
Analysts have drawn connections between Bitcoin’s price movements and the global monetary base, arguing that Bitcoin tends to appreciate during periods of increased liquidity from central banks. With growing concerns about recession risks, the likelihood of central banks adopting expansionary monetary policies rises, thereby increasing the chances for Bitcoin’s price to breach the $105,000 mark within the next couple of months.
Social media user Pakpakchicken highlighted a significant correlation, noting an 82% relationship between the global money supply (measured by M2) and Bitcoin’s price. As central banks tighten liquidity—through interest rate hikes or bond sales—traders often retreat from risk assets, resulting in subdued demand for Bitcoin. Conversely, when central banks ease monetary policies, investor interest may reignite, creating upward pressure on Bitcoin’s price.
In a notable instance in early September 2024, Bitfinex margin traders added 7,840 BTC to their long positions after Bitcoin had languished below the $50,000 threshold for an extended period. Their resolute stance ultimately prevailed, culminating in a price surge that saw Bitcoin reclaim the $75,000 level in less than two months. This timing coincided with a bottoming out of the global money supply, further solidifying the connection observed by some analysts.
The interplay of macroeconomic factors and key political events complicates the narrative surrounding Bitcoin’s price. For example, Donald Trump’s election in November 2024 drove Bitcoin’s rally, bolstered by a pro-crypto policy outlook from the new administration, which may have overshadowed the fundamental dynamics of global liquidity.
Adding another layer to the current market dynamics, Michael Saylor’s Strategy recently announced plans to raise up to $21 billion in capital to expand its Bitcoin holdings, intensifying competition in the space despite enduring $4.1 billion in net outflows from Bitcoin spot exchange-traded funds (ETFs) since February 24. Despite these outflows, Strategy remains a significant player, holding 499,096 BTC, acquired at a cumulative cost of $33.1 billion, reinforcing its long-term bullish outlook.
The potential increase in Bitcoin’s price could be catalyzed by an evolving regulatory landscape. A report from the Wall Street Journal revealed discussions involving representatives from Trump’s camp about a potential stake in Binance. To date, the anticipated benefits of a crypto-friendly regulatory environment in the U.S. have yet to materialize fully. The Office of the Comptroller of the Currency (OCC) has not clarified rules around banks managing digital assets, and recent comments from Acting SEC Chairman Mark Uyeda indicate intentions to relax crypto-specific provisions.
While broader global macroeconomic conditions are pressuring Bitcoin’s price, they may simultaneously pave the way for future stimulus measures that could enhance liquidity. If current trends persist, analysts predict strong upward momentum for Bitcoin, potentially aligning with Pakpakchicken’s projection of hitting $105,000 by May 2025.
