Financial analysts have publicly criticised the use of global M2 money supply data to predict price movements in Bitcoin (BTC), calling such analyses mathematically unsound and misleading.
Criticism comes amidst the global M2 money supply, which has seen a record high. Several analysts have predicted similar trends in BTC.
Is Global M2 Money Data a reliable predictor of Bitcoin price movement?
An analyst known as Txmctrades shared his thoughts on X (formerly Twitter). He specifically pointed out the charts of macro investors Raul PAL, comparing Bitcoin prices to the global M2.
TxmCtrades argued that charting global M2 daily or weekly is fundamentally flawed due to inconsistent update frequency of underlying data. He says that doing so distorts the information by amplifying short-term fluctuations rather than providing accurate and long-term trends.
“People, if the US updates M2 every week and everything else is updated monthly, you can’t create a daily or weekly time series for “Global M2”! “I have read the post.
He explained that many countries have yet to update their numbers beyond February, creating a major gap in their datasets. TxmCtrades argued that this inconsistency results in metrics that greatly reflect the fluctuations in Forex (FX) rather than actual money supply dynamics.
“You’re looking at the weighted inverse dollar exchange rate of M2 at 95% of the time. Better at math!” he added.
He also highlighted wider concerns about the misuse of the Global M2. Analysts emphasized that China, which accounts for 46% of the global M2, is the only major economy, surpassing its wide peak on dollar terms.
“They are now trying to ease from the ongoing multi-year debt deflation and do a pretty shit job on it.
Meanwhile, the US M2 is below its peak in 2022. Additionally, analysts highlighted that, except for the 2022-2024 period, it has grown at its slowest pace since Bitcoin began. This suggests that the US is not experiencing rapid money supply growth, which could affect inflation and other economic trends.
Txmctrades argues that this disparity further undermines the reliability of the global M2 as a predictor of Bitcoin price movement. Analysts also challenged the use of “random offsets” and matched the Global M2 to Bitcoin price movement. This is a method that several analysts employ.
For example, Raul PAL suggests a 12-week delay between the global M2 and Bitcoin prices. Meanwhile, Colin says Crypto is suggesting 15.4 weeks behind. Meanwhile, Wall Street estimates the delay is between 10.7 and 15 weeks. Some people extend the correlation of M2 to predict Altcoin prices such as Solana (SOL).
“Sol is chasing the last two legs to the Global M2 Money Supply (+100 days). If this continues, Sol is set to pump in large quantities within the next two weeks,” analyst Curb posted.
Nevertheless, analysts said the offset is often arbitrary and does not reflect the actual dynamics of money supply or asset prices.
“Money is money, there’s no waiting time,” he insisted.
Analysts suggested that such models have been overabundant with recent historical data and lack a strong foundation for prediction. Finally, TxmCtrades sought greater rigor in its financial analysis. He urged analysts to “stop the growth of fraud analytics,” and adopted a more mathematically sound approach to understanding the dynamics of cryptocurrency prices.
