Latest view from experts revealed that Bitcoin could benefit from a massive injection of liquidity predicted for 2025, potentially attracting $2 trillion in novel BTC investment.
This forecast comes from expectations that the US Federal Reserve will significantly escalate the global money supply, which could improve BTC’s market capitalization and price performance.
Increased liquidity and market implications of Bitcoin
According to Jamie Coutts, chief cryptocurrency analyst at Real Vision, the global money supply, also known as M2, is expected to grow from $107 trillion today to over $127 trillion in 2025. This 18% escalate in liquidity driven by economic factors and monetary policy could act as a critical catalyst for BTC.
Coutts highlights that BTC has historically captured around 10% of newly injected liquidity, which suggests the cryptocurrency could see significant inflows in the coming period.
Coutts explained that BTC’s performance is closely linked to changes in liquidity in the global financial system. Historical data shows that from Q4 2022 to the present, the global M2 money supply has increased from $94 trillion to $105 trillion.
The value of global M2 reached its lowest level in the fourth quarter of 2022 at PLN 94,000. dollars, and has since increased to 105 thousand. dollars. During this period, Bitcoin’s market capitalization increased fivefold, increasing its value by PLN 1.5 thousand. dollars. In other words, 10% of the novel money supply leaked from the fiat system into Bitcoin’s emerging global reserve assets (gold, stocks, etc.) pic.twitter.com/w0vWIMufbg
— Jamie Coutts CMT (@Jamie1Coutts) November 28, 2024
During the same period, Bitcoin’s market capitalization increased fivefold, adding $1.5 trillion. These numbers indicate that Bitcoin has absorbed approximately 10% of the novel liquidity entering the system, strengthening its role as an emerging global reserve asset.
With a projected $20 trillion in liquidity growth in 2025, Bitcoin has the potential to attract $2 trillion in novel investment. Coutts’ analysis highlights that the reduction in monetary value, along with Bitcoin’s excellent annual returns of over 113%, will likely accelerate institutional adoption of the cryptocurrency.
This trend positions BTC as an “increasingly attractive alternative” to established investment vehicles, especially amid ongoing concerns about the strength of fiat currency.
Bitcoin Outlook for 2025 and Institutional Adoption
Coutts further predicts that the global M2 money supply will peak on January 26, 2026, as economic policy continues to expand monetary bases.
This timeline is in line with BTC price projections potentially reaching $150,000 in 2025. This growth is expected to be driven by weakening confidence in the US dollar and the broader fiat system, encouraging investors to seek alternative ways to store value.
It is worth noting that institutional interest in BTC is also likely to escalate as the asset demonstrates its resilience and profitability. With a growing reputation as a hedge against inflation and monetary depreciation, Bitcoin could attract a wider range of investors seeking stability in the face of economic uncertainty.
Featured image created with DALL-E, chart from TradingView
