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Massive Liquidity and Gold Parity Could Trigger Next Rally

9 hours ago
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Bitcoin Outlook: Massive Liquidity and Gold Parity Could Trigger Next Rally

Bitcoin’s next major move may be taking shape as global liquidity builds and gold edges closer to parity with the world’s money supply.

Cryptocurrency analyst Colin Talks Crypto believes the convergence between gold and the global M2 supply could act as a catalyst for Bitcoin to follow with a powerful catch-up phase – one that could begin within weeks.

While gold has surged to record levels in 2025, Bitcoin’s pace has been comparatively restrained. Yet, according to Colin, Bitcoin has historically followed gold’s trajectory with a lag, often entering its strongest rallies after the precious metal peaks. This delayed correlation could now be setting the stage for another explosive phase in the digital asset market.

Gold and Global M2 Nearing Overlap

Colin explained that global M2, which represents the total money supply including cash, deposits, and liquid assets, has continued to expand as central banks prepare for looser monetary conditions. Gold prices, meanwhile, have been catching up rapidly to reflect that monetary expansion. The analyst noted that this overlap period – where both gold and M2 rise simultaneously – has historically preceded large upside moves in Bitcoin.

“There’s usually a one-month window where gold and the global money supply move together before Bitcoin reacts,” he said. Based on historical data, he expects this overlap to occur in early November, potentially triggering a new wave of Bitcoin momentum shortly after.

Colin added that the BTC-to-gold ratio also appears ready for a technical breakout, reinforcing the idea that Bitcoin could soon outperform gold. The ratio, which compares Bitcoin’s price performance against gold, has tightened in recent months, often a precursor to a directional surge.

$7.5 Trillion in Money Market Funds Waiting for a Catalyst

Adding to this bullish setup is the immense amount of cash currently parked in money market funds. According to Federal Reserve data, over $7.5 trillion now sits on the sidelines – a record figure that has grown rapidly since the Fed began tightening monetary policy.

These funds have offered attractive yields in a high-rate environment, but analysts warn that aggressive Fed rate cuts could reverse that dynamic. If yields on these funds fall, investors may begin reallocating toward risk assets, including equities and digital assets like Bitcoin.

Market observers note that the last time a large-scale yield compression occurred, liquidity rotated out of money markets and into higher-return assets. If even a fraction of today’s $7.5 trillion moves toward crypto markets, it could inject significant upward pressure on Bitcoin’s price and the broader digital asset sector.

Historical Pattern Suggests Bitcoin Lags Gold, Then Outperforms

Colin’s thesis rests on a consistent pattern seen across multiple cycles. Gold typically rallies first as investors seek inflation hedges and safe-haven exposure. Bitcoin, often described as “digital gold,” tends to lag behind, only accelerating once the monetary expansion narrative becomes mainstream.

This delay, he suggests, gives investors a critical window before Bitcoin catches up. “Bitcoin doesn’t need to move in perfect sync with gold or M2,” he said, explaining that while the correlation often diverges during market peaks, the overall long-term trend remains intact.

The analyst predicts that Bitcoin’s most significant rally could start around November 8, extending over the next one to two months if macro conditions align. However, he also cautioned that timing remains uncertain and that investors should expect volatility during the transition period.

Capital Rotation Could Amplify the Move

Further supporting this outlook, recent data from Bitwise suggests that a modest capital shift from traditional safe havens could have a dramatic impact on Bitcoin’s valuation. The firm estimated that even a 5% capital rotation from gold into Bitcoin could propel BTC to roughly $242,000, more than doubling its current value.

The reasoning is simple: Bitcoin’s total market capitalization remains a fraction of gold’s, meaning even minor inflows can produce exponential price effects. A smaller rotation — such as just 1% of gold’s market share – could still lift Bitcoin above $134,000 based on Bitwise’s model.

If that capital influx aligns with the liquidity wave expected from declining money market yields, Bitcoin could find itself at the center of one of the largest reallocation events in financial history.

Growing Institutional Readiness

Institutional readiness adds another layer of potential momentum. With spot Bitcoin ETFs now a mainstream financial product and custodial frameworks expanding globally, large investors have more avenues than ever to gain exposure. This reduces friction for traditional capital seeking alternatives amid falling real yields and growing currency debasement concerns.

Some analysts argue that the macro backdrop is strikingly similar to late 2020 – a period that preceded Bitcoin’s previous parabolic run. The key difference this time, however, is scale: far greater liquidity, institutional access, and mainstream adoption.

Bitcoin Price Analysis: Technicals Reflect Short-Term Consolidation

At the time of writing, Bitcoin trades at around $107,800, down 0.6% over the past 24 hours and roughly 4% lower on the week. Despite the mild pullback, Bitcoin maintains a market capitalization of over $2.14 trillion, while 24-hour trading volumes hover near $101 billion, underscoring continued market activity.

On the 4-hour chart, BTC appears to be consolidating after a brief rebound from recent lows. The Relative Strength Index (RSI) currently sits near 52, indicating neutral momentum, while the MACD shows weakening bullish momentum following a brief crossover.

Support remains near $106,000, while resistance levels are seen at $112,000 and $118,000. A break above those thresholds could open the path toward renewed highs above $120,000, especially if broader liquidity conditions turn favorable. Conversely, failure to hold current support may trigger a short-term retest of the $104,000 area before the next potential leg upward.

Conclusion: The Perfect Storm for Bitcoin?

Between the $7.5 trillion pool of idle capital, gold’s convergence with global money supply, and the potential for capital rotation into digital assets, the conditions appear aligned for Bitcoin to enter its next major phase.

Colin Talks Crypto’s analysis points to early November as a potential inflection point – when global liquidity dynamics, technical signals, and market sentiment could converge. If history rhymes, Bitcoin may once again follow gold’s lead, but with far greater velocity.

The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.

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Author

Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.

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Source: https://coindoo.com/bitcoin-outlook-massive-liquidity-and-gold-parity-could-trigger-next-rally/