{"id":178892,"date":"2021-01-01T13:21:14","date_gmt":"2021-01-01T13:21:14","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=178892"},"modified":"2021-01-02T03:24:10","modified_gmt":"2021-01-02T03:24:10","slug":"bitcoin-prices-greatest-catalyst-in-2021-is-the-expanding-m1-supply-heres-why","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/bitcoin-prices-greatest-catalyst-in-2021-is-the-expanding-m1-supply-heres-why\/","title":{"rendered":"Bitcoin price’s greatest catalyst in 2021 is the expanding M1 supply\u2014here’s why"},"content":{"rendered":"

The price of Bitcoin<\/a> is surging and there are many catalysts behind it, such as institutional demand and the appetite for risk-on assets.<\/p>\n

But, there is one major factor that makes Bitcoin particularly compelling<\/a> as a store of value and that is the M1 Money Supply.<\/p>\n

\"btcusd
The price trend of Bitcoin. Source: BTCUSD on TradingView<\/a><\/figcaption><\/figure>\n

Central bank liquidity injections boost inflation, make Bitcoin appealing<\/h2>\n

Throughout 2020, central banks have injected significant liquidity into the market.<\/p>\n

Due to the pandemic, central banks were pressured to maintain relaxed financial conditions. They achieved this by printing more money and encouraging more stimulus to boost the economy.<\/p>\n

A direct consequence of that has been the devaluation of reserve currencies. Most notably, the U.S. dollar has fallen substantially since mid-2020.<\/p>\n

Bitcoin and gold are both considered alternative stores of value and safe-haven assets. As such, they are valued against the U.S. dollar and when the dollar declines, both assets benefit from it.<\/p>\n

The dollar has struggled to recover throughout the past seven months. It has seen one of the worst slumps in history, declining against both alternative assets and other reserve currencies.<\/p>\n

A concerning trend is that the M1 Money Supply has been expanding rapidly as the dollar continues to drop.<\/p>\n

For institutions and accredited investors, this specific trend has made Bitcoin more attractive as a potential hedge against inflation.<\/p>\n

\n

"There's nothing wrong. Everything's fine." pic.twitter.com\/ATPN7G0hjg<\/a><\/p>\n

— Finance Optimum (@FinanceOptimum) December 23, 2020<\/a><\/p><\/blockquote>\n