Investors have expressed concerns about Bitcoin’s recent price volatility, especially in delicate of analyst predictions of a 20-25% decline in the global M2 money supply.

At $92,864, bitcoin is down almost 9% from its recent high of just under $100,000. This decline is part of the trend of profit-taking by long-term holders, who sold 366,000 BTC last month, the most since April 2024.

Introduction to the M2 money supply connection

Market researchers have been studying the relationship between Bitcoin prices and Bitcoin prices global money circulation M2. Crypto analyst Joe Consorti noted that Bitcoin prices regularly track M2 prices, albeit 70 days later.

Bitcoin tracked global M2 with a ~70-day lag from September 2023.

I don’t want to alarm anyone, but if this happens, Bitcoin could see a 20-25% correction.

Global M2 in ⚪️
Bitcoin in 🟠 pic.twitter.com/PlPoaHUoFR

— Joe Consorti ⚡️ (@JoeConsorti) November 25, 2024

This is, Bitcoin price will likely follow M2’s downtrend in the near future. The recent decline in M2 shows that Bitcoin could fall to the vital support levels of $88,000 and even $80,000 if things continue as they have been.

UPDATE: A day after my last chart, bitcoin is now $5,000 lower, following very closely the path set by global M2 a few weeks ago.

So far, this correlation is shockingly precise.

We will have to see if BTC will follow it all the way or if it will stop and find support.

🍿🍿🍿 pic.twitter.com/oEGOuYYRio

— Joe Consorti ⚡️ (@JoeConsorti) November 26, 2024

Bitcoin is weakening as it cannot stay above $94,000. Because breaking these liquidity zones could result in larger declines, analysts are watching them closely. Investors are concerned because the chance of Bitcoin hitting $100,000 by the end of the year has dropped from 92% to 64%.

Pressure from long-term holders to sell

The latest Glassnode data shows that there are more long-term holders (LTH). busy in saleswith over 507,000 BTC distributed as of September 2023. This selling pressure is significant and indicates that many investors are liquidating their profits in the context of the current market volatility.

A potential shift in market sentiment, indicated by increased LTH activity, could further intensify downward pressure on Bitcoin’s price.

Additionally, the realized profit/loss (P/L) ratio has reached recent all-time highs, indicating that the market is overheating. An boost in this ratio usually means that a significant portion of investors are benefiting from the price boost. Analysts warn that Bitcoin’s rising momentum may be fading due to the current trend of profit-taking and dwindling liquidity.

Bitcoin’s future prospects – what’s in store?

As it deals with these challenges, Bitcoin’s future is still quite hazy. Although there are market observers who believe that the price of the top cryptocurrency may normalize at lower levels, there are also analysts who warn that additional adjustments may be necessary in the event of a further decline in global liquidity.

Featured image from DALL-E, chart from TradingView