The relationship between Bitcoin and M2 Global Money supply chart has been in the making for a long time, maintaining similarities over the years. Given that these two seem to be following each other over the years, the M2 rise is something analysts have pointed to as bullish for Bitcoin. But recent deviations have reduced the need for similarity and many believe the correlation is over. However, one analyst pointed out that the chart is misunderstood.
Bitcoin price is still following the M2 chart.
Crypto analyst KillaXBT shared a chart showing M2 performance compared to Bitcoin performance. However, instead of showing only recent years, the analyst shows the correlation for the last three bull and bear market cycles, showing that the two have always followed each other.
The analysis showed that investors who put the two charts together did something wrong and misunderstood how correlation actually works. According to KillaXBT, the deviations that caused people to abandon the M2 chart are nothing special and they are actually following the correct trend.
The analyst explains that the current downtrend that the Bitcoin price is seeing actually follows what happened in the past when M2 reached its peak. The result for Bitcoin has always been that M2 peaks and then collapses, effectively plunging into a bear market.
As the cryptocurrency analyst explained, the order is wrong, with M2 taking first place and then Bitcoin taking first place. Rather, the opposite is true, with the Bitcoin price reaching its highest peak for the first time. Since then, while the Bitcoin price has fluctuated for a while, M2 continues to rise. Then, when M2 finally peaks, it will lead to a continued downtrend for Bitcoin.
In the analysis, KillaXBT explained that M2 did not actually take first place. So it continues to trend upward. If this analysis is accurate, it means that Bitcoin’s decline is not over yet, given that prices typically fall when M2 peaks.
Related reading: Zachxbt identifies other cryptocurrencies like RAVE with the same trajectory. What do they have in common?
Given that this trend has been repeated over the past three cycles, analysts explain that a split is unlikely this time around. As a result, investors should prepare for the impact of when M2 finally peaks before Bitcoin bottoms.
Featured image by Dall.E, chart by TradingView.com
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