Bitcoin Price Declines Nearly 9% Amid M2 Money Supply Predictions
Investors are concerned about Bitcoin's recent price movements, particularly with predictions of a 20-25% decrease in the global M2 money supply.
Currently at $92,864, Bitcoin has declined nearly 9% from its recent peak of just under $100,000. This decline is attributed to profit-taking by long-term holders, who sold 366,000 BTC in the past month, marking the highest sell-off since April 2024.
Introduction To The M2 Money Supply Connection
Market researchers have analyzed the correlation between Bitcoin prices and global M2 money circulation. Crypto analyst Joe Consorti noted that Bitcoin prices have historically followed M2 trends with a 70-day delay.
Bitcoin has tracked global M2 with a ~70-day lag since September 2023. I don’t want to alarm anyone, but if it continues, bitcoin could be in for a 20-25% correction.
Global M2 in
Bitcoin in
pic.twitter.com/PlPoaHUoFR
— Joe Consorti
(@JoeConsorti) November 25, 2024
Bitcoin’s price is likely to decline following M2's downward trend. The latest data indicates potential support levels at $88,000 or even $80,000.
UPDATE: One day after my last chart, bitcoin is now $5,000 lower, following the path set by global M2 several weeks ago very closely. So far, this correlation is shockingly accurate. We’ll have to see if BTC follows it all the way down, or stops short & finds support.
— Joe Consorti
Bitcoin has struggled to maintain levels above $94,000. Analysts are monitoring liquidity zones closely as breaking these could lead to more significant declines. The probability of Bitcoin reaching $100,000 by year-end has dropped from 92% to 64%.
Long-Term Holders’ Pressure To Sell
According to Glassnode, long-term holders (LTHs) have been increasingly active in selling, with over 507,000 BTC sold since September 2023. This substantial selling pressure indicates that many investors are liquidating profits amid current market volatility.
The uptick in LTH activity suggests a potential shift in market sentiment, possibly increasing downward pressure on Bitcoin's price. Additionally, the Realized Profit/Loss (P/L) ratio has reached historical highs, indicating an overheated market. An increase in this ratio typically means many investors are profiting from price increases, leading analysts to warn that Bitcoin's momentum may be declining due to profit-taking and reduced liquidity.
Bitcoin Future Outlook
The future of Bitcoin remains uncertain as it navigates these challenges. Some market observers believe the price may stabilize at lower levels, while others caution that further corrections could occur if global liquidity continues to diminish.
Featured image from DALL-E, chart from TradingView