The growing money supply in the United States could be the key to unlocking more upward momentum for Bitcoin (BTC), according to market analysts and historical chart patterns.

M2 money supply growth could catalyze the next bull run

The M2 money supply estimates all cash and short-term bank deposits across the United States, and its growth has historically been correlated with previous Bitcoin bull runs.

The growth of the money supply could hold the key for the next leg up for the Bitcoin cycle, according to Jamie Coutts, chief crypto analyst at Realvision, who wrote in a May 16 X post:

“This is due to a high correlation with $BTC bull cycles. Of the big 3 I track in my Bitcoin/Liquidity framework, Global M2 appears to capture the most of the moves.”

However, the changes in the money supply seem more important for Bitcoin price than the nominal value, according to Coutts:

“The rate of change in money supply is more important than the nominal value. The chart confirms what our MSI performance table suggests: Bitcoin usually moves with shifts in M2 momentum.”

At the beginning of May, the M2 money supply turned positive year-over-year for the first time since November 2023, signaling that investors could soon start looking for hedges against inflation such as Bitcoin.

The price action of the U.S. dollar could be another catalyst for Bitcoin price if it breaks below the 101 mark, according to Coutts:

“The Dollar is range bound. A break below 101 would be rocket fuel for Bitcoin.”

Related: Crypto trader turns $3K into $46M in one month as PEPE price soars

Bitcoin breaks month-long downtrend: analyst

Bitcoin broke its month-long daily downtrend on May 16, according to popular crypto analyst Rekt Capital, who wrote to his 468,000 followers in an X post:

“Bitcoin has broken its Daily Downtrend which started one month ago in mid-April. When downtrends get broken, uptrends occur. Bitcoin has finally recorded its first Higher Higher since bottoming at $56,000.”

Over on the four-hour chart, Bitcoin price saw a breakout to the upside, after a nearly five-week downtrend that started on April 8.

However, Bitcoin’s relative strength index (RSI) peaked at 77 on May 16 before retracing to its current value of 66. While this suggests that Bitcoin is trading at fair value, it may need to fall to around the 50 mark before BTC price could see more upside momentum.

The RSI is a popular momentum indicator used to measure whether an asset is oversold or overbought based on the magnitude of recent price changes.

Bitcoin price faces significant resistance around the $66,500 mark. A potential move above would liquidate over $111 million worth of leveraged short positions across all exchanges, according to Coinglass data.

Related: Altcoins will bottom in early summer before bull run — Analyst

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.