Bitcoin Struggles Amid 8.5% Global Money Supply Increase Fed Rate Cut Hopes

Bitcoin has been experiencing a lackluster performance this week, but analysts suggest that its trajectory could change if it follows the global money supply. According to Jurrien Timmer, Director of Global Macro at Fidelity, gold prices could see a boost after the global money supply hit an 8.5% year-on-year increase, driven by geopolitical tensions. However, Bitcoin's volatile nature might exhibit a contrasting outlook.

Timmer revealed that both gold and Bitcoin exhibit rising Sharpe ratios, signaling improved risk-adjusted returns. The metric’s reliability underlines the possibility of a price recovery, but Bitcoin’s dual role—oscillating between a store of value and a “Nasdaq proxy” undermines its stability.

Markets analyst Tony Sycamore conveyed a similar outlook for Bitcoin, stating that BTC trades more as a risk asset like US equities rather than a safe-haven asset like gold in 2025. Likewise, LVRG research director Nick Ruck told that BTC’s “digital gold” narrative is losing steam, with most traders focusing on short-term volatility rather than opting for BTC as a risk-adjusted asset.

With the Federal Reserve holding rates steady at 4.25%-4.50% (unchanged since December 2024), Bitcoin price has struggled this week, reflecting its sensitivity to unclear monetary policy and global conflict. However, during a interview on Friday, Fed Governor Christopher Waller said a rate cut could occur as early as July. Waller dismissed concerns that tariffs would significantly boost inflation, suggesting interest rates could be lowered as early as next month.

A rate cut could significantly boost Bitcoin's prospects for a Q3 rally. However, historical seasonality suggests a rally might not occur until Q4. Bitcoin network economist Timothy Peterson noted that over the past decade, Bitcoin’s median return from June 1 to Sept. 30 has been only 1% for the entire four-month period, not per month. Such a trend would inherently keep BTC above $100,000 for a better part of the period, leading to stronger rallies in Q4.

On Friday, Bitcoin experienced a significant retracement following a liquidity grab near the $106,000 level during the trading session. Technical analysis reveals persistent bearish momentum across higher and lower time frames, suggesting a high probability of another liquidity sweep targeting the $102,614 level in the coming days. If selling pressure intensifies, the price could decline toward the $100,000 threshold, aligning with the previous range lows and a key daily fair value gap.

In summary, analysts predict that Bitcoin should hold above $100,000 as Q3 seasonality predicts sideways trading. The potential Fed rate cut in July may boost Bitcoin, but historical data shows Q3 tends to be flat, with only a 1% median return from June to September. Bitcoin's volatile nature and its dual role as a store of value and a risk asset undermine its stability, making it trade more like a risk asset than a safe haven.