Global Liquidity Says Bitcoin Is Extremely Undervalued – Here’s The ‘Real’ Figure

Overview

Recent commentary from crypto analyst Kyle Chassé highlights the notion that Bitcoin is currently undervalued, attributing this to rising global liquidity and weakening fiat currencies. With the M2 money supply reaching unprecedented levels, the implications for Bitcoin’s value are significant, particularly in the context of global economic conditions.

Current Market Analysis

Kyle Chassé has drawn attention to the increasing global liquidity as evidence that Bitcoin is undervalued. His observations coincide with a decline in the values of fiat currencies, particularly the Dollar and Yen, amidst concerns regarding governmental fiscal policies. In a recent post, Chassé presented a chart suggesting a potential Bitcoin target of $270,000, arguing that while some may view $90,000 as an expensive price point for Bitcoin, the realities of the fiat currency system underscore the necessity of digital assets.

Chassé noted that the global M2 money supply has reached a record level, driven by aggressive monetary expansion in major economies including the U.S., Eurozone, China, and Japan. He emphasized that year-to-date global liquidity growth has accelerated to 6.2%, marking the fastest increase since the pandemic response in 2020. This surge in liquidity, according to Chassé, indicates that in a system where fiat currency is continuously diluted, fixed-supply assets like Bitcoin are positioned as a hedge against currency devaluation and potential inflation.

The context of these comments is particularly relevant as the U.S. dollar has experienced a decline, with the DXY index dropping since the beginning of the year. Additionally, the Yen has also weakened year-to-date, further exacerbating concerns over the sustainability of fiat currencies amid increased government spending. Such conditions are generally viewed as bullish for Bitcoin, given its fixed supply in contrast to the ongoing printing of fiat currencies.

Furthermore, BitMEX co-founder Arthur Hayes has echoed similar sentiments, suggesting that a rise in dollar liquidity could lead to an increase in Bitcoin prices. However, despite these predictions, Bitcoin has continued to behave like a risk asset, losing its year-to-date gains amid rising political tensions in the U.S. The potential for a government shutdown by January 31 has also contributed to a recent drop in Bitcoin’s price, which fell below $87,000.

From author

The discussions surrounding Bitcoin’s value amid rising global liquidity shed light on the ongoing debate about the role of cryptocurrencies in an increasingly uncertain economic landscape. As fiat currencies face challenges from both inflationary pressures and governmental fiscal policies, the potential for fixed-supply assets like Bitcoin to serve as a store of value becomes more pronounced. Analysts’ predictions about Bitcoin’s future price movements are closely tied to liquidity trends and broader economic indicators, making it essential for market participants to stay informed.

Impact on the crypto market

• The rising global liquidity may lead to increased interest in Bitcoin as a hedge against currency debasement.
• Declining fiat currencies, such as the Dollar and Yen, could drive more investors towards cryptocurrencies.
• Increased government spending may bolster the case for Bitcoin, given its fixed supply.
• Short-term volatility in Bitcoin prices, influenced by political tensions and potential government shutdowns, may create opportunities for long-term investors.
• Analysts’ predictions regarding Bitcoin’s price targets reflect a growing belief in its potential as an alternative asset class in times of economic uncertainty.