Bitcoin’s recent price movement indicates that the cryptocurrency may continue its correction, potentially dipping below $88,000. The drop comes after a rejection at the $100,000 level, and analysts are pointing to the correlation between Bitcoin’s price and the global M2 money supply as a key factor in this downturn. If the pattern holds, Bitcoin could face a 20-25% correction from its recent peak.
Bitcoin and M2 Money Supply: A Historical Correlation
Bitcoin’s price has historically mirrored the trends of the global M2 money supply, a key measure of liquidity. Market analysts, including Joe Consorti, have noted that since September 2023, Bitcoin’s movements have closely followed changes in M2, with a delay of about 70 days. Consorti recently highlighted that Bitcoin’s $5,000 drop within a single day aligns with shifts in global M2 that occurred weeks earlier.
Consorti warns that if this trend continues, Bitcoin could face a significant decline from its recent highs of $99,000, potentially falling by 20-25%. However, he cautions that it remains to be seen whether Bitcoin will follow this pattern to the full extent or if it will find support before hitting those lower levels.
On-Chain Data Shows Increased Selling Pressure from Long-Term Holders
On-chain data from Glassnode also signals that Bitcoin’s price correction may persist. Long-term holders (LTHs) are offloading their Bitcoin at an accelerated pace, with monthly sales reaching 366,000 BTC— the highest since April 2024. This surge in selling pressure has led to the distribution of 507,000 BTC since September, adding to concerns that Bitcoin may struggle to maintain upward momentum.
Analysts note that the selling activity by LTHs is significant but still smaller than the 934,000 BTC sold during Bitcoin’s rally into its March 2024 all-time high. Despite the large volume of Bitcoin being offloaded, the market is still grappling with the uncertainty of the broader economic climate.
Critical Price Levels and Liquidity Zones
Bitcoin has recently lost the critical support level of $94,000, leading analysts to revise their price targets lower. Some now predict that Bitcoin could test $88,000 or even $80,000 if the correction continues. Crypto analyst Justin Bennett has identified key liquidity zones, highlighting that Bitcoin’s largest block of liquidity over the past 30 days sits around $73,000. As long as Bitcoin remains below the $93,600 mark, $86,000 and $73,000 are key levels to watch for potential price support.
Market Sentiment: Odds of $100K Decline
The chances of Bitcoin reaching the $100,000 mark by the end of the year have dropped significantly, from 92% to 64%. Predictions for Bitcoin hitting $100K by November have fallen sharply from 88% to just 18% in the last four days. Additionally, the recent decline in MicroStrategy stock, which fell 35% in just four days, has added to the overall bearish sentiment in the market.
Looking Ahead: Bearish Outlook for Bitcoin
With Bitcoin currently trading at $92,864 and facing pressure from both the global M2 money supply correlation and increased selling by long-term holders, the outlook for Bitcoin remains uncertain. Analysts are watching closely to see whether Bitcoin will find support at the critical levels of $88,000 or $80,000, or if the market will continue its bearish trend toward lower price targets.
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