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Investors have expressed concerns about the recent volatility in Bitcoin prices, especially in light of analysts’ expectations of a 20-25% decline in the global M2 money supply.
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At $92,864, Bitcoin is down about 9% from its recent high of just under $100,000. The decline is part of a profit-taking trend by long-term holders, who sold 366,000 bitcoins last month, the most since April 2024.
Introduction to the M2 money supply connection
Market researchers study the relationship between Bitcoin prices and Global Money Trading M2. Cryptocurrency analyst Joe Consorti noted that Bitcoin prices regularly track M2 prices, albeit after 70 days.
Bitcoin has tracked the global M2 with a lag of approximately 70 days since September 2023.
I don’t want to upset anyone, but if this continues, Bitcoin could see a 20-25% correction.
Global M2 in ⚪️
Bitcoin in 🟠 pic.twitter.com/PlPoaHUoFR– Joe Consorti ⚡️ (@JoeConsorti) November 25, 2024
that it, Bitcoin price It is likely to follow the M2 downward trend in the near future. The recent decline in M2 shows that Bitcoin could fall to important support levels of $88,000 or even $80,000 if things continue as they are.
Update: One day after the last chart, Bitcoin price is now down $5,000, following the path set by the global M2 several weeks ago.
So far, this connection is shockingly accurate.
We will have to see if BTC follows along, or stops short and finds support.
🍿🍿🍿 pic.twitter.com/oEGOuYYRio
– Joe Consorti ⚡️ (@JoeConsorti) November 26, 2024
Bitcoin has been weakening because it cannot stay above $94,000. Because breaking these liquidity zones could lead to larger declines, analysts are watching them with interest. Investors are concerned because the chance of Bitcoin reaching $100,000 by the end of the year has dropped from 92% to 64%.
Long-term owners pressure to sell
The latest Glassnode data indicates that the number of long-term holders (LTHs) of the coin was greater Active in sellingwith over 507,000 BTC distributed since September 2023. This selling pressure is significant and indicates that many investors are liquidating their profits in the context of current market volatility.
A potential shift in market sentiment, suggested by increased activity among LTHs, could exacerbate downward pressure on Bitcoin price.
In addition, the realized profit/loss ratio has reached new historical levels, indicating an overheated market. An increase in this ratio usually means that a large percentage of investors benefit from price increases. Analysts warn that Bitcoin’s growing momentum may be diminished by the current profit-taking trend and declining liquidity.
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Bitcoin Future Predictions – What’s in Store?
While Bitcoin is making its way through these challenges, the future of Bitcoin is still quite murky. Despite the fact that there are market observers who believe that the price of the top cryptocurrency could return to normal levels at lower levels, there are also analysts who warn that additional corrections may be needed if global liquidity continues to decline.
Featured image from DALL-E, chart from TradingView