Bitcoin and gold face a critical turning point in the face of the global money supply

The dynamics of financial markets are centered around a little-known but fundamental indicator: the money supply. Currently, two major assets are testing historically significant levels—Bitcoin and gold—offering investors a window into inflationary pressures and macroeconomic movements shaping the global economy.

Gold Approaching a Barrier Unbreached for Half a Century

Measured against the US money supply (M2SL, representing the total stock of dollars in circulation including cash, bank deposits, and liquid savings), gold is nearing a level that was only briefly reached in 2011 and at the dawn of the 1970s. This threshold was decisively broken during the spectacular rally of the late 1970s, when prices more than tripled to around $700 per ounce.

Since 2011, when the precious metal traded at $1,800 per ounce, the gold price has risen remarkably. Currently, it hovers around $4,500, representing a 150% appreciation over this period. This year alone, the increase has reached 70%, driven by inflation fears and geopolitical uncertainty. This bullish movement stands out compared to the performance of cryptocurrencies over the same period.

Bitcoin Tests a Key Support Amid Money Supply Pressure

Meanwhile, Bitcoin (BTC)—often called digital gold by its supporters—is approaching a critical support level. Currently valued at about $70,520 (up 3.14% over 24 hours), Bitcoin’s price is converging toward a floor established during the “tariff crisis” of April 2024, a level that also corresponds to the peak of the previous cycle from March 2024.

This juxtaposition of levels is not coincidental. It suggests that markets could redefine themselves around these anchor points. Unlike gold, which has surged 70% this year, Bitcoin has declined about 10%, illustrating the divergence of cycles between these two stores of value.

However, an important observation emerges: in each cycle, Bitcoin manages to set new highs relative to the money supply. The current support thus appears more as a potential rebound point rather than a definitive ceiling.

Recent Movements and Their Catalysts

Bitcoin temporarily surpassed $70,000 and consolidated most of its gains following President Donald Trump’s announcement of a five-day pause on strikes targeting Iranian energy infrastructure. This geopolitical event fueled a risk-off sentiment in traditional markets, benefiting defensive assets—and apparently, speculative assets as well.

Altcoins, including Ethereum, Solana, and Dogecoin, rose about 5% in sympathy. Cryptocurrency-related mining stocks followed the trend, driven by the overall momentum in equity markets. The S&P 500 and Nasdaq each gained around 1.2%.

Critical Levels to Watch

Analysts agree on a scenario dependent on geopolitical factors. If oil prices and maritime traffic through the Strait of Hormuz stabilize, Bitcoin could rise and test the zone between $74,000 and $76,000—a psychologically important territory.

Conversely, escalating tensions or worsening market conditions could lead to a retreat toward the mid-range of the $60,000s, erasing most of the recent gains.

The Role of the Money Supply in the Equation

What unites these scenarios is the underlying role of the money supply. As central banks adjust their monetary policies in response to inflationary pressures, assets considered hedges—gold and Bitcoin—become strategic pivots. The money supply remains a key indicator for anticipating future movements of these two stores of value: traditional gold and digital Bitcoin.

Investors and traders are watching these levels closely, aware that the next significant move will depend not only on local dynamics but also on adjustments in the money supply and the monetary policy decisions that follow.