Bitcoin’s impressive breakout above $120K has reawakened enthusiasm throughout markets. But is this a signal of a bull market gaining strength or a rally that is susceptible to macro headwinds?
The latest breakout in Bitcoin has been impressive and technically significant. As can be seen from the weekly chart below, we can say with confidence that the higher time frame trend continues to be strongly bullish.
This push placed Bitcoin above the critical $112,000 region, the former all-time high, and closed the weekly candle at the highest point in the history of Bitcoin. Even in the case of Bitcoin suffering a deep retracement as high as 10%, the market would still be sustaining a strong and evidently bullish high-timeframe structure.
This breakout wasn’t merely a marginal new high, it was accompanied by strong force and momentum, with lots of room for downside volatility while still holding the larger uptrend. For investors and traders, this is a possible chance to position for potential dips in what we view as a strong bullish market environment.
Bitcoin’s long-term price movement has tended to reflect changes in global liquidity, as evidenced by the chart below. In it, Bitcoin (orange) is graphed against Global M2 money supply (white) on a monthly basis, displaying a definite directional correlation between the two.
When large economies increase their money supply, additional liquidity has a tendency to find its way into risk assets. It’s not a 1:1 perfect correlation, but in the past, Bitcoin bull markets have started during phases of accelerating M2 growth.
Current figures put worldwide M2 at $94.36 trillion as of May 2025, with a three-month growth of +4.11%, a rate which continues to be higher than the long-term average, indicating a resurgence in liquidity. If this pattern persists, it can offer additional support for Bitcoin’s breakthrough above $120K.
Impressive as Bitcoin’s breakout above $120K is, the question is whether it is the continuation of a larger bull market or a rally that is susceptible to macro headwinds.
A look at traditional markets suggests global risk sentiment remains supportive, with equities climbing alongside crypto. However, there are emerging signs that inflation may be reaccelerating, potentially complicating this bullish backdrop.
The most recent U.S. CPI release saw Core Goods adding 15bps to Headline inflation in June, the most significant monthly contribution since mid‑2023. We think this acceleration captures the initial influence of newly implemented tariffs, which are starting to pass through to consumer prices. With import prices increasing, households and businesses must pay more for products from electronics to furniture, a dynamic that played out during past tariff waves.
This is important because sticky inflation may keep central banks on edge, which could dampen the liquidity expansion that has driven Bitcoin’s rally thus far. Although the current macro environment continues to be conducive to risk assets, these events provide a note of caution for traders looking for a straight-line move upward.
Disclaimer: The content provided here is for informational purposes only and is not intended as personal investment advice and does not constitute a solicitation or invitation to engage in any financial transactions, investments, or related activities. Past performance is not a reliable indicator of future results. The financial products offered by the Company are complex and come with a high risk of losing money rapidly due to leverage. These products may not be suitable for all investors. Before engaging, you should consider whether you understand how these leveraged products work and whether you can afford the high risk of losing your money. The Company does not accept clients from the Restricted Jurisdictions as indicated on its website / T&Cs. Some products and services, including MT5, may not be available in your jurisdiction. The applicable legal entity and its respective products and services depend on the client’s country of residence and the entity with which the client has established a contractual relationship during registration.
