Storm Ahead? Bitcoin Price Could Tumble 20% Due To M2 Supply Concerns
Investors have expressed concern about Bitcoin’s recent price volatility, especially given analysts’ predictions that the global M2 money supply will decline by 20-25%.
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Bitcoin is at $92,864, down nearly 9% from its recent high of just under $100,000. The decline is part of a trend of profit-taking by long-term holders, who sold 366,000 BTC last month, the highest level since April 2024.
Introduction to M2 Money Supply Connection
Market researchers have been studying Bitcoin price vs. Global M2 currency circulation. Cryptocurrency analyst Joe Consorti pointed out that Bitcoin prices often track M2 pricing, albeit 70 days late.
Since September 2023, Bitcoin has tracked global M2 with a lag of approximately 70 days.
I don’t want to alarm anyone, but if this continues, Bitcoin could see a 20-25% correction.
⚪️ Global M2
Bitcoin in 🟠 pic.twitter.com/PlPoaHUoFR— Joe Consorti ⚡️ (@JoeConsorti) November 25, 2024
That is, Bitcoin price M2 may follow the downward trend in the near future. The latest drop in M2 suggests that if things continue this way, Bitcoin could fall to the important support level of $88,000 or even $80,000.
Update: One day after my last chart, Bitcoin is now down $5,000, very close to the path set by global M2 a few weeks ago.
So far, this correlation has been pretty accurate.
We have to see if Bitcoin goes all the way down, or cuts its losses and finds support.
🍿🍿🍿 pic.twitter.com/oEGOUYYRio
— Joe Consorti ⚡️ (@JoeConsorti) November 26, 2024
Bitcoin has been weakening and unable to sustain above $94,000. Analysts are watching closely as a breakout of these liquidity areas could lead to larger losses. Investors are worried as the chance of Bitcoin reaching $100,000 by the end of the year has plummeted from 92% to 64%.
Selling pressure from long-term holders
Latest data from Glassnode shows that long-term holders (LTH) have Aggressive salesSince September 2023, more than 507,000 BTC have been distributed. This selling pressure is intense and suggests that many investors are liquidating profits amid the current market volatility.
The increase in LTH activity points to a potential shift in market sentiment that could further intensify downward pressure on Bitcoin prices.
Additionally, the realized profit/loss (P/L) ratio has hit an all-time high, indicating an overheated market. An increase in this ratio usually means that a significant portion of investors benefited from the price increase. Analysts warn that Bitcoin’s upward momentum may be fading due to the current trend of profit-taking and declining liquidity.
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Bitcoin Future Outlook – What’s Coming?
In the process of overcoming these challenges, Bitcoin’s future remains quite murky. While some market observers believe prices of top cryptocurrencies can normalize at lower levels, other analysts warn that further adjustments may be needed if global liquidity continues to diminish.
Featured images from DALL-E, charts from TradingView
