Storm Ahead? Bitcoin Price Could Tumble 20% Due To M2 Supply Concerns

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As a seasoned researcher with over two decades of experience in financial markets, I have seen numerous cycles of market euphoria and despair. The recent price fluctuations of Bitcoin, particularly its 9% drop from $100,000, have piqued my interest due to the potential connection between Bitcoin prices and global M2 money supply.

Concerns about Bitcoin‘s price swings have been voiced by investors, especially given the forecasted drop of 20-25% in the worldwide M2 money supply as per analyst estimates. This potential decrease might lead to unease among investors.

Currently sitting at approximately $92,864, Bitcoin has dropped nearly 9% from its peak of almost $100,000. This decrease is due to a pattern of profit-taking among long-term investors, who have offloaded about 366,000 Bitcoins over the past month – the highest amount since April 2024.

Introduction To The M2 Money Supply Connection

Researchers investigating the connection between Bitcoin’s value and worldwide M2 money flow have found that Bitcoin prices often follow the trend of M2 pricing, but with a delay of approximately 70 days according to crypto expert Joe Consorti.

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

— Joe Consorti (@JoeConsorti) November 25, 2024

In the upcoming period, it’s predicted that the value of Bitcoin could mirror the decreasing trend of M2 money supply. The recent dip in M2 suggests a possible decline for Bitcoin, potentially reaching significant support levels around $88,000 or even $80,000 if current conditions persist.

UPDATE: A day since my previous graph, the current bitcoin price stands at $5,000 less. This decrease appears to align quite closely with the trajectory of global M2 money supply which was established a few weeks back.

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 (@JoeConsorti) November 26, 2024

The value of Bitcoin has been decreasing since it fails to maintain levels above $94,000. Experts are closely monitoring these resistance points as a potential break could lead to even larger drops. Investors are growing concerned because the odds of Bitcoin reaching $100,000 by the end of this year have dropped significantly from 92% to 64%.

Long-Term Holders’ Pressure To Sell

According to the latest data from Glassnode, long-term Bitcoin holders (LTHs) have been increasingly disposing of their assets, amounting to approximately 507,000 BTC since September 2023. This significant selling activity suggests that a large number of investors are cashing out their gains amid the current market fluctuations, exerting pressure on prices.

A rise in trading among Long-Term Holders (LTHs) might indicate a change in market opinion, potentially intensifying the drop in Bitcoin’s value.

Moreover, the Realized Profit/Loss (P/L) rate has hit record highs, suggesting a market running hot. A surge in this ratio usually means that many investors are profiting from price escalations. However, analysts warn that Bitcoin’s upward trend might be slowing down as a result of increased profit-taking and dwindling liquidity.

Bitcoin Future Outlook – What Is In Store?

Regarding Bitcoin’s journey through current obstacles, its future remains unclear and somewhat shrouded in uncertainty. While some market experts predict that Bitcoin’s price could stabilize at reduced values, other analysts caution that further adjustments may be necessary if global liquidity keeps shrinking.

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2024-11-28 17:46