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A financial analyst has publicly criticized the use of global M2 money supply data to predict Bitcoin (BTC) price movements, calling such analyses mathematically unsound and misleading.

The criticism comes amid a surge in the global M2 money supply to an all-time high. Several analysts are forecasting similar trends for BTC.

Is Global M2 Money Data a Reliable Predictor for Bitcoin Price Movements?

The analyst, known as TXMCtrades, shared his thoughts on X (formerly Twitter). He specifically pointed to a chart by macro investor Raoul Pal that compared Bitcoin’s price to global M2.

TXMCtrades argued that charting global M2 daily or weekly is fundamentally flawed due to the inconsistent update frequencies of the underlying data. According to him, doing so distorts the information by amplifying short-term fluctuations instead of providing an accurate, long-term trend.

“People, you can’t create a daily or weekly time series of “Global M2” when the United States is only updating M2 on a weekly basis and all others are monthly!” the post read.

He explained that many countries have yet to update their figures beyond February, creating significant gaps in the dataset. TXMCtrades contended that this inconsistency results in a metric that largely reflects foreign exchange (FX) fluctuations rather than actual money supply dynamics.

“You’re looking at an M2 weighted inverse dollar exchange rate 95% of the time. Be better at math!” he added.

He also highlighted broader concerns about the misuse of global M2. The analyst stressed that China, which constitutes 46% of global M2, is the only major economy with a broad money supply above its post-COVID peak in dollar terms. 

“They are currently trying to ease out of an ongoing multi-year debt deflation and doing a pretty shit job of it. Their M2 goes straight up,” TXMCtrades remarked.

Meanwhile, US M2 remains below its 2022 peak. In addition, the analyst emphasized that it is growing at its slowest pace since Bitcoin’s inception, excluding the 2022-2024 period. This suggests that the US is not experiencing rapid money supply growth, which could impact inflation or other economic trends.

This disparity, TXMCtrades argues, further undermines the reliability of global M2 as a predictor of Bitcoin price movements. The analyst also disputed the use of “random offsets” to align global M2 with Bitcoin price movements, a method employed by several analysts.

For instance, Raoul Pal has suggested a 12-week lag between global M2 and Bitcoin’s price. Meanwhile, Colin Talks Crypto proposes a 15.4-week lag. Meanwhile, Mr. Wall Street estimates the lag to be between 10.7 and 15 weeks. Some have even extended the M2 correlation to predict altcoin prices, such as Solana (SOL).

“SOL has been following Global M2 Money Supply (+100 days) its last two legs up. If this continues, SOL is set to pump massively within the next 2 weeks,” analyst Curb posted.

Nonetheless, the analyst stated that offsets are often arbitrary and don’t reflect the actual dynamics of money supply or asset prices.

“Money is money, it doesn’t have a wait time,” he claimed.

The analyst suggested that such models are overfitted to recent historical data and lack a strong foundation for forecasting. Lastly, TXMCtrades called for greater rigor in financial analysis. He urged analysts to “stop proliferating scammy analysis” and adopt more mathematically sound approaches to understanding cryptocurrency price dynamics.

Ethereum price started a fresh decline below the $1,650 zone. ETH is now consolidating and might decline further below the $1,550 support zone.

• Ethereum started a fresh decline below the $1,650 and $1,620 levels.
• The price is trading below $1,600 and the 100-hourly Simple Moving Average.
• There is a new connecting bearish trend line forming with resistance at $1,600 on the hourly chart of ETH/USD (data feed via Kraken).
• The pair could start a fresh increase if it clears the $1,655 resistance zone.

Ethereum Price Faces Resistance

Ethereum price struggled to continue higher above $1,700 and started a fresh decline, like Bitcoin. ETH declined below the $1,620 and $1,600 support levels. It even spiked below $1,550.

A low was formed at $1,538 and the price is now correcting some losses. There was a move above the $1,565 level. The price climbed above the 23.6% Fib retracement level of the downward move from the $1,690 swing high to the $1,538 low.

Ethereum price is now trading below $1,600 and the 100-hourly Simple Moving Average. On the upside, the price seems to be facing hurdles near the $1,600 level. There is also a new connecting bearish trend line forming with resistance at $1,600 on the hourly chart of ETH/USD.

The next key resistance is near the $1,615 level or the 50% Fib retracement level of the downward move from the $1,690 swing high to the $1,538 low. The first major resistance is near the $1,650 level. A clear move above the $1,650 resistance might send the price toward the $1,690 resistance.

An upside break above the $1,690 resistance might call for more gains in the coming sessions. In the stated case, Ether could rise toward the $1,750 resistance zone or even $1,800 in the near term.

Another Decline In ETH?

If Ethereum fails to clear the $1,600 resistance, it could start another decline. Initial support on the downside is near the $1,560 level. The first major support sits near the $1,535 zone.

A clear move below the $1,535 support might push the price toward the $1,500 support. Any more losses might send the price toward the $1,420 support level in the near term. The next key support sits at $1,400.

Technical Indicators

Hourly MACD – The MACD for ETH/USD is losing momentum in the bearish zone.

Hourly RSI – The RSI for ETH/USD is now above the 50 zone.

Major Support Level – $1,535

Major Resistance Level – $1,650