The latest insight from experts has revealed that Bitcoin is poised to benefit from a massive liquidity injection projected for 2025, potentially drawing $2 trillion in new investments into BTC.

This prediction stems from expectations that the US Federal Reserve will significantly increase the global money supply, which could boost BTC’s market cap and price performance.

Liquidity Growth And Bitcoin’s Market Implications

According to Jamie Coutts, a chief crypto analyst at Real Vision, the global money supply, also known as M2, is expected to grow from its current $107 trillion to over $127 trillion in 2025. This 18% increase in liquidity, spurred by economic factors and monetary policies, may act as a critical catalyst for BTC.

Coutts highlights that BTC has historically captured around 10% of newly injected liquidity, suggesting that the cryptocurrency could see significant inflows during this upcoming period.

Coutts explained that BTC’s performance is closely tied to liquidity movements in the global financial system. Historical data reveals that between Q4 2022 and the present, the global M2 money supply rose from $94 trillion to $105 trillion.

Global M2 bottomed at $94T in Q4 2022 and has since climbed to $105T. During this period, Bitcoin’s market cap 5x’ed, adding $1.5T. In other words, 10% of the new money supply has leaked from the fiat system into the emerging global reserve asset of Bitcoin (gold, equities etc… pic.twitter.com/w0vWIMufbg

— Jamie Coutts CMT (@Jamie1Coutts) November 28, 2024

During the same period, Bitcoin’s market cap increased fivefold, adding $1.5 trillion. These figures indicate that Bitcoin absorbed roughly 10% of the new liquidity entering the system, reinforcing its role as an emerging global reserve asset.

With the projected $20 trillion liquidity boost in 2025, Bitcoin could potentially attract $2 trillion in new investments. Coutts’ analysis highlights that monetary debasement, alongside Bitcoin’s superior annualized returns exceeding 113%, will likely enhance the cryptocurrency’s institutional adoption.

This trend positions BTC as an “increasingly attractive alternative” to traditional investment vehicles, particularly as concerns over fiat currency strength persist.

Bitcoin’s 2025 Prospects and Institutional Adoption

Coutts further predicts that the global M2 money supply will peak on January 26, 2026, as economic policies continue to expand monetary bases.

This timeline aligns with forecasts of BTC’s price potentially reaching $150,000 in 2025. This growth is expected to be fueled by weakening confidence in the US dollar and the broader fiat system, encouraging investors to seek alternative stores of value.

Notably, institutional interest in BTC is also likely to rise as the asset demonstrates its resilience and profitability. With a growing reputation as a hedge against inflation and monetary debasement, Bitcoin may attract a wider array of investors seeking stability amidst economic uncertainty.

Featured image created with DALL-E, Chart from TradingView