#Bitcoin to US Narrow Money Supply (M1) ratio 1W chart;
#Bitcoin to US Narrow Money Supply (M1) ratio 1W chart;
I suggest you read it to the end.
This type of chart is used to understand how much Bitcoin has gained or lost in value relative to the Narrow Money Supply in the US.
In the chart, the total market capitalization of Bitcoin is plotted against the US Narrow Money Supply (M1). M1 includes money in circulation (cash) and demand deposits at banks. This type of ratio can help to understand how valuable Bitcoin is in the macroeconomic environment.
In a nutshell;
If the chart is rising: Bitcoin is rising.
If the chart is falling: The US money supply is increasing.
If the US money supply increases and Bitcoin's market capitalization remains the same, then the chart will fall again. It means that Bitcoin is losing value against the US dollar.
In short, we need to look more carefully at what is causing the decline.
When does the US Narrow Money Supply (M1) appreciate?
- Raising interest rates
- Economic empowerment
- Liquidity reduction
The first 2 points above are not hard to guess, but let's elaborate on point 3;
The FED may implement monetary tightening policies to reduce the amount of dollars in the market. In this case, the money supply may contract and the value of the dollar may rise. This is called illiquidity.
To summarize;
An appreciation of the US money supply often puts pressure on risky assets such as Bitcoin and can depress their prices.
There are also important historical notes above the chart
The white trend line is important. Because every time it comes here, we see that it experiences strong price movements with important news.
Therefore, it may be necessary to follow the agenda closely when it comes to this trend line again.
I suggest you read it to the end.
This type of chart is used to understand how much Bitcoin has gained or lost in value relative to the Narrow Money Supply in the US.
In the chart, the total market capitalization of Bitcoin is plotted against the US Narrow Money Supply (M1). M1 includes money in circulation (cash) and demand deposits at banks. This type of ratio can help to understand how valuable Bitcoin is in the macroeconomic environment.
In a nutshell;
If the chart is rising: Bitcoin is rising.
If the chart is falling: The US money supply is increasing.
If the US money supply increases and Bitcoin's market capitalization remains the same, then the chart will fall again. It means that Bitcoin is losing value against the US dollar.
In short, we need to look more carefully at what is causing the decline.
When does the US Narrow Money Supply (M1) appreciate?
- Raising interest rates
- Economic empowerment
- Liquidity reduction
The first 2 points above are not hard to guess, but let's elaborate on point 3;
The FED may implement monetary tightening policies to reduce the amount of dollars in the market. In this case, the money supply may contract and the value of the dollar may rise. This is called illiquidity.
To summarize;
An appreciation of the US money supply often puts pressure on risky assets such as Bitcoin and can depress their prices.
There are also important historical notes above the chart
The white trend line is important. Because every time it comes here, we see that it experiences strong price movements with important news.
Therefore, it may be necessary to follow the agenda closely when it comes to this trend line again.
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