Trump Hits Bitcoin, But PMI Signals a Big Market Shift Ahead

During the early weeks of Donald Trump’s second term as U.S. president, Bitcoin (BTC) has experienced steep price movement. Bitcoin reached $109,000 on Inauguration Day, only to fall to $78,000 by late February and regain about $96,000. However, those gains disappeared within days, with some analysts suggesting possible market manipulation.

Despite recent volatility, economic indicators point to a shift in the business cycle, which may influence Bitcoin’s next major move.

PMI Shows Economic Expansion After Long Decline

The Institute for Supply Management publishes the Purchasing Managers Index (PMI) every month to show the state of the U.S. economy. The PMI of manufacturing, in particular, is very closely watched for it is leading other data in indicating economic trends.

A reading above 50 suggests economic expansion, while a figure below 50 indicates contraction. After 26 straight months below 50, the PMI climbed above this level in January and stayed there in February.

“ISM typically moves ahead of the economy by about a month,” said Real Vision founder Raoul Pal. “And it’s not limited to the economy—it affects all assets.”

Economists often look at PMI trends when predicting stock market movements, corporate earnings, and investor confidence. The recent uptick suggests a stronger economy, which could shift investment strategies across financial markets.

Bitcoin’s Price and the Business Cycle

Market data suggests a connection between Bitcoin’s price and the business cycle. S&P Global Market Intelligence found that PMI movements have predicted turning points in corporate earnings for more than a decade.

Macro analyst TomasOnMarkets explained that when the economy grows, corporate earnings rise and recession risks stay low, investors tend to take on more risk.

Bitcoin’s price has followed similar trends in past cycles. In 2021, Bitcoin’s peak aligned closely with the broader business cycle rather than reaching an expected all-time high. 

Based on current economic trends, Pal believes Bitcoin could reach its next major peak in late 2025 or early 2026, coinciding with the business cycle’s highest point.

Global Liquidity Trends and Bitcoin’s Future

Another factor influencing Bitcoin’s price is the global M2 money supply, which tracks how much money is circulating. Historical data shows that Bitcoin’s price often reacts to changes in M2 with a delay of around 10 weeks.

Analyst Colin Talks Crypto has studied the relationship between global liquidity and Bitcoin’s price, identifying typical reaction periods of 46 to 72 days.

Market strategist Lyn Alden has examined how Bitcoin reacts to liquidity shifts. She stated, “Bitcoin follows global liquidity trends 83% of the time over 12 months, more than any other major asset.”

With both the business cycle and global money supply trending upward, analysts are watching closely to see how these factors shape Bitcoin’s price movement in the coming months.