Analysts believe there is “a lot of money to spend” and this will help Bitcoin (BTC) reach the next level of massive price hikes.
In a blog post on August 25, Jeroen Blokland, a portfolio manager at wealth management firm Robeco, indicated that the speed of the US M2 fund is at an all-time low.
‘A lot of money to spend’
Velocity measures the speed at which money is moving in the economy and there was a breakdown in the scale in 2020.
In theory, Balkland wrote, “the speed of money increases with the increase in economic activity.”
While the economic sudden stop has clearly resulted in a significant drop in economic activity, the sharp decline also indicates a need to spend more money. A quick look at central bank balance sheets confirms this. ”
The massive money printing activity by the Federal Reserve alone marked the period since March when the Coronavirus crashed into the multi-asset market.
The Fed’s Vicious Circle: More Inflation, More Money
As Cointelegraph reported, the increase in central bank balance sheets in the G4 countries went hand in hand with the increase in safe-haven assets – bitcoin, gold and silver.
For PlanB, the quantitative analyst behind price prediction models from stocks to the flow of bitcoin, a collapse in the velocity of money will only accelerate the largest cryptocurrency on its way to the latest forecast – an average of $ 288,000 by 2024.
The cross-asset model (S2FX) offers multiple “levels” of Bitcoin as an asset, and the $ 288,000 price is part of the fifth level.
“S2FX: $ 288,000 is the focus (focus on S2F’s market value) for the next phase, as is the focus on $ 6,700 for the final / current phase,” PlanB tweeted in March, commenting on the infographic.
“We do not know (yet) exactly when the fifth phase will start and end, but we are looking at the previous groups: about 6 months after 2020 it will be halved, by the year 2024 it will halve + 6 meters.”
Meanwhile, Balkland warned of the effect of slow speed on fiscal policy. This week, the Fed is largely inclined to announce plans to raise its inflation target to 4%.
“The slow speed of money also means that more money is needed to create inflation. But so far, this has only led to asset price inflation.