Recent bullish predictions for Bitcoin’s price increase are based on an expected rise in global M2 money supply. However, an analyst warns that the supporting data are misleading, with concerns over daily/weekly data accuracy and its correlation with Bitcoin prices. The critique emphasizes discrepancies in M2 data updates between countries, particularly the US and China, and how these affect analysis.
A surge of bullish predictions regarding Bitcoin is circulating among influencers on X, suggesting that a new rise in global M2 money supply could lead to an immediate rally in Bitcoin prices. However, a seasoned market analyst cautions that the underlying data for these predictions may be misleading. The speculation began when Raoul Pal, co-founder of Real Vision, released a comparison between Bitcoin and Global M2, urging followers that a price increase is imminent within days.
Other analysts reinforced this sentiment, sharing similar graphs that indicate Bitcoin is aligned with Global M2, typically exhibiting a lag of 12 weeks. One forecasted that Bitcoin could see aggressive gains shortly, having previously reached a low of $74,500. Nevertheless, scepticism arose as criticisms targeted the methodology behind these bullish charts, specifically highlighting the reliance on dynamic currency fluctuations that skew the results.
Renowned critic TXMC challenged the validity of measuring Global M2 on a daily or weekly basis, labelling it as impractical. He pointed out that the United States only updates its M2 data weekly, while other countries do so monthly, leading to discrepancies in the data. TXMC noted that with China making up approximately 46% of the Global M2, its broad money supply is currently above pre-COVID levels, in contrast to the declining US M2 supply.
Critiquing the visual correlations presented in various charts, TXMC highlighted the flaws in using arbitrary time offsets, which can distort the perceived relationship between Bitcoin and Global M2. He warned that while some correlations might hold monthly, they do not translate effectively into daily or weekly predictions, and the charts may represent overfitted analysis driven by short-term trends in the market.
In response, YouTuber Colin Talks Crypto defended the use of higher-frequency data reported by central banks, specifically mentioning that China’s M2 numbers are updated daily. However, TXMC rebutted this claim, arguing that no true daily M2 data exists, suggesting that these figures are merely estimative projections rather than accurate reflections. He reiterated that the fluctuations seen in Global M2 are primarily a result of the dollar’s value changes rather than a substantive increase in money supply. As of the latest update, Bitcoin was trading at $84,750.
